Microfinance sector: Average collection efficiency improves to 95% in Q2 from 85% in Q1 – The Financial Express

Clipped from: https://www.financialexpress.com/industry/banking-finance/microfinance-sector-average-collection-efficiency-improves-to-95-in-q2-from-85-in-q1/2370586/

Asset quality of the lenders of the sector improved on a sequential basis with portfolio at risk (PAR) above 30 days falling to 10.18% as on September 30 from 16.56% as on June 30, 2021, according to the quarterly review of the sector by Sa-Dhan, a self-regulatory organisation for the sector.

Talking to FE, Satish said collection efficiencies in Assam and Kerala improved in the second quarter compared to the first, but the figures lagged far behind the national average due to “external issues”.Talking to FE, Satish said collection efficiencies in Assam and Kerala improved in the second quarter compared to the first, but the figures lagged far behind the national average due to “external issues”.

The country’s microfinance sector saw a significant improvement in loan repayments in the second quarter of the current fiscal year, when average collection efficiency for micro loans increased to over 95% from around 85% in the first quarter.

Asset quality of the lenders of the sector improved on a sequential basis with portfolio at risk (PAR) above 30 days falling to 10.18% as on September 30 from 16.56% as on June 30, 2021, according to the quarterly review of the sector by Sa-Dhan, a self-regulatory organisation for the sector.

At the end of the second quarter, this fiscal year, the micro credit portfolio of the lenders stood at Rs 2,25,331 crore, down by 1.1% year on year. Total disbursement of all lenders, however, grew 95.4% YoY to Rs 66,694 crore in the second quarter of FY22 compared to Rs 34,135 crore during the same period of FY21. Average ticket size also rose to Rs 35,106 from Rs 34,756.

Sa-Dhan executive director P Satish said, “The sector which was affected in Q1 of this financial year due to the second Covid wave, has seen improvement in repayments and fresh disbursements. The decline is slowing down, although there remains stress on fund access and operations of mid- and small- MFIs.”
Satish said Sa-Dhan hoped and expected a gradual recovery by the third quarter as borrowers’ incomes further stabilised. “We have written to the government to sanction an additional `7,500 crore under the Credit Guarantee Scheme for the sector,” he said.

Talking to FE, Satish said collection efficiencies in Assam and Kerala improved in the second quarter compared to the first, but the figures lagged far behind the national average due to “external issues”.

The Assam government has started the process of providing the one-time relief to the stressed microfinance borrowers in the state after it had signed a memorandum of understanding with microfinance lenders in August for implementation of the relief scheme. For Kerala, high number of Covid positive cases and the recent flood impacted loan repayments.

For the industry as a whole, portfolio at risk (PAR) above 60 days improved to 4.72% as on September 30 from 6.41% as on June 30, 2021. And, PAR above 90 days stood at 2.96% at the end of the second quarter as against 3.01% at the end of the first quarter this fiscal year.

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