That compares with a peak of Rs 42,300 crore three months prior to that.
Banks including the country’s largest microfinance lender, Bandhan Bank, account for about 45% of the sectoral bad loans, industry sources said. Banks account for about 34% of the microfinance loan outstanding of Rs 3.52 lakh crore.
“There has been a substantial reduction of NPAs in the overall microfinance portfolio during the quarter. The reduction seems to be due to improved collection of past dues and bad loans write-off,” Sa-Dhan executive director Jiji Mammen told ET.
Bandhan Bank sold bad loans worth Rs 2316 crore to asset reconstruction companies (ARC) during the quarter ending March, helping its micro loan NPA ratio to fall to 5.9% from 9.7% a year back.
Bandhan had a microloan portfolio of Rs 56820 crore (about 35% of its total loan outstanding of Rs 1.1 lakh crore) at the end of March as against Rs 62400 crore a year back. The reduction in portfolio was due to technical write-offs and adjustment after the sale of bad loans to ARCs.
The overall NPA ratio for the sector has come down to 10.41% from 13.25% over the same period, according to Sa-Dhan, the oldest microfinance industry body.Out of the NPA pile, loans to the tune of about Rs 32,900 crore were very sticky, with this stock remaining unpaid after 180 days of the due date. In financial sector parlance, these sticky loans are called portfolios at risk for more than 180 days or PAR 180 days. The size of PAR 180 days was Rs 37,250 crore three months back.
The sector recorded an overall 21% year-on-year loan growth to Rs 3.52 lakh crore, according to data compiled by Sa-Dhan. The growth was well supported by all types of microfinance lenders, except the banking group which saw a mere 3% rise in portfolio in FY23.
The non-banking finance company-microfinance institutions (NBFC-MFI) group saw 37% rise in outstanding portfolio to Rs 1.40 lakh crore, consolidating the group’s numero uno position as the provider of micro loans. Around 8.5% of this portfolio remained NPA even after the balance sheet management.
Banks (excluding small finance banks) remained the second largest group in micro lending to joint liability group members with Rs 1.2 lakh crore loan outstanding. Loans given to self-help group members are not part of this data. Out of this portfolio, 14% is NPA, a person familiar with the matter said.
Small finance banks had 16.6% microfinance market share with Rs 58431 crore portfolio while 11.3% of it is NPA.
