New Delhi, Sep 15 (KNN) According to Sa-Dhan’s “Bharat Microfinance Report – 2016”, the Indian microfinance industry is pegged at Rs. 63,853 crores making it about US$ 10 billion industry.

The industry is beginning to see benefits of scale with reduced interest for borrowers. The top 10 NBFC-MFIs contributing  80% of the sector’s Gross Loan Portfolio or over Rs. 40,000 crores have a weighted average interest rate of 23.13%, far below the 26% max cap under PSL guidelines.

Microfinance Report shows that over 36 NBFC-MFI members have reduced rates significantly in the last financial year itself. The high growth rate continues, despite Bandhan, which was the largest MFI, becoming a bank. While as of March 2016, the total loan portfolio of MFIs has reached an all-time high of over Rs. 63,853 crores clocking 31% growth, but if Bandhan’s loan portfolio of Rs. 9,524 crore of 2014-15 is taken out the actual growth rate of the sector between 2014-15 to 2015-16 is over 60%.

As per the report, the sector witnessed a healthy growth in client base with over 28 lakhs new members taking the total number of client to over 399 lakhs. But the average loan per borrower of Rs. 11,425 is less than last year’s Rs. 13,162. 

Speaking about the report, P. Satish, Executive Director – Sa-Dhan, said, “Despite Bandhan going out of microfinance space, the sector witnessed a strong growth. Attaining over 28 lakhs clients is no mean feat. This goes on to show that the microfinance industry, having reached its inflection point, is growing steadfastly.

He however said that the more than 100 % growth of 13 MFIs does raise some concerns.” He further added, “MFIs are finding BC model rather attractive on the credit side.”

The year saw a huge growth in the Business Correspondents (BC) model. With RBI allowing NBFC-MFIs to act as BCs, managed portfolio has substantially increased. In the last financial year, the BC Portfolio constituted 13% of total portfolio and 47% of the managed portfolio of MFIs. The BC portfolio amounts to Rs. 7,894 crores. (KNN Bureau)