Default rate in microfinance sector declining, post-pandemic: Report

Karnataka and Tamil Nadu are the states with the highest percentage of outstanding loans from micro finance followed by Bihar, Uttar Pradesh and Madhya Pradesh

Nikesh Singh 

A microfinance loan is defined as a collateral-free loan given to a household having annual household income up to Rs 3 lakh

The microfinance sector is coming out of Covid-induced stress, with the default rate for microfinance institutions (MFIs) declining from 16.7 per cent in June 2021 to 5.3 per cent in March 2022, according to the Inclusive Finance India Report by ACCESS Development Services.
With some seasonal and event-based exceptions, net non-performing assets have been less than 1 per cent in the last 20 years.
“The portfolio at risk (30+ days) for the sector as a whole increased from 1.39 per cent in March 2020 to 9.01 per cent in March 2021. It then fell to 5.27 per cent in March 2022. The spike in 2021 and 2022 was attributable to loans under moratorium. It was also for subsequent restructuring falling due for payment but had a difficult livelihood situation that made loan service impossible,” the report said.  

Also Read

Microfinance loans grow 24% YoY in Q1 of FY23; credit quality stable

Customer protection the core of new RBI microfinance rules: Dy governor Rao

Microfinance disbursements slowed in Q1 FY23 after new regulations: MFIN

Microfinance loan securitisation grows over two-fold YoY in Q1FY23

Risky lending: Share of subprime borrowers higher at PSBs, shows data

NCLT sanctions amalgamation of Equitas Holdings and Equitas SFB

Cryptoverse: Bitcoin on the charge in 2023, clocks a 26% gain in January

Yen perched near 7-mth high as investors wait for policy shift at BOJ

Sidbi partners with VFS to extend MSME loans up to Rs 5 lakh at 13% pa

Outstanding microfinance loan portfolio to rise 20.3% in FY23: MFIN

First Published: Jan 17 2023 | 9:40 PM IST

Explore News

To read the full story, subscribe to BS Premium now, at just Rs 249/ month.

Key stories on are available only to BS Premium subscribers. Already a BS Premium subscriber?LOGIN NOW

Register to