Stress in microfinance: Q2 sees further increase in delinquencies across all ticket sizes, lender types – The Financial Express

Stress in India’s microfinance sector continued during the second quarter of the current financial year. Q2 FY25 witnessed a further increase in delinquencies across all DPD (days past due) bands and across all ticket sizes and lender types, according to the latest quarterly report on the microfinance sector by credit bureau Crif High Mark. 
The delinquent portfolio (portfolio at risk or PAR) by up to 30 days increased to 2.1 per cent of the overall microfinance portfolio as of September 2024 from 1.2 per cent as of June. Likewise, loans due for over 31 days and up to 180 days increased to 4.3 per cent during the September quarter from 2.7 per cent in the June quarter. Loans unpaid for over 91 days and up to 180 days jumped to 1.8 per cent and those unpaid for over 180 days increased to 2.6 per cent. 
Lender-wise, PAR 31-180 was higher for small finance banks compared to other major lenders. It increased to 4.3 per cent for banks and NBFC-MFIs while for NBFCs it increased to 2.5 per cent and for small finance banks it jumped to 5.4 per cent in the September quarter from 2.6 per cent, 2.5 per cent, 1.5 per cent, and 3.7 per cent respectively in June quarter. 
The highest deterioration was observed in Rs 30,000-50,000 ticket size loans with PAR 31-180 increasing to 5.3 per cent during the September quarter from 3.1 per cent in the June quarter followed by 4.5 per cent for loans below Rs 30,000, 3.6 per cent for Rs 50,000-80,000 loans. 
The rise in delinquencies has come amid a contraction in the overall microfinance portfolio in September. According to the data, the microfinance portfolio stood at Rs 4.14 lakh crore, down by 4.3 per cent from Rs 4.32 lakh crore in the June quarter which had declined by 2.3 per cent from Rs 4.42 lakh crore during the March quarter. 
Moreover, the active loan account also declined by 3.7 per cent in the September quarter to Rs 15.3 crore from Rs 15.9 crore in the June quarter.  
Further, the amount and loan count disbursed also dropped by 13.3 per cent and 16.1 per cent respectively. The amount disbursed during the September quarter declined to Rs 69,296 crore from Rs 79,894 crore in the June quarter while disbursed loan volume also narrowed to 1.37 crore from 1.63 crore. 
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