NPA: Microfinance NPA at all time high of Rs 36,500 crore as loans restructured earlier showing stress

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Stress in Microfinance The sector’s bad debt ratio rose for the second quarter in a row to 12.1% at the end of September, compared with 10.5% six months earlier.

It has gross non-performing assets of Rs. 36,418 crore, which is an all-time high. This is despite significant write-offs of highly sticky loans by lenders as a balance sheet tool.

The portfolio At risk (PAR) rose to 14.5% of the total 3 lakh crore portfolio over 30 days. PAR 30+ stood at 13.1% at the end of March 2022, the data released Microfinance Institutions Network (MFIN) showed.

“Rising NPA This is due to pressure on restructured loans,” said a chief executive of a microfinance institution. “About half of restructured loans end up not being repaid,” he said. A portfolio at risk beyond 30 days means that the interest on those loans has not been repaid even after 30 days from the due date. The PAR 30+ ratio was highest at 20.9% for banks and 13.9% for small ones. Finance Banks and 10.5% NBFC-MFIs. The ratio was 3.8% for other non-bank lenders and 8.4% for non-profit lenders, MFIN data showed.

As on September 30, 2021, the sector-wise gross NPA ratio stood at 10% and the PAR 30+ ratio stood at 17.1%. At the time, Reserve Bank of India It allowed lenders to restructure microfinance loans to help them keep their NPA ratio low.

“Portfolio performance has improved with PAR > 30 days on a year-on-year basis and will stabilize as the Covid effect wears off,” MFIN Chief Executive Alok Mishra said.

“The portfolio created after COVID is performing very well and inspires confidence,” he said.

The overall microfinance sector currently has a Rs. 3.01 lakh crore in total loan portfolio, up from Rs. 2.44 lakh crore showing a growth of 23.5%.

Active microfinance loan accounts have grown by 14.2% in the last one year to 12 crore.

According to data released by Sa-Dhan a few days ago, the microfinance market grew by 20% to Rs 2.71 lakh crore. Sa-Dhan does not include loans that are in default for more than 180 days (PAR 180+) in the outstanding portfolio, an official from the industry association said. This may account for the discrepancy between the MFIN and Sa-Dhan data.

According to MFIN data, the total loan portfolio of NBFC-MFIs stood at Rs 1.06 lakh crore as on September 30, reflecting a year-on-year rise of 31%. Banks hold the largest share of portfolio in microcredit with outstanding loans of Rs 1.14 lakh crore, which is 37.7% of the total microcredit universe.


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