New Delhi, Apr 2 (KNN) The Indian microfinance industry witnessed robust growth, with the total loan portfolio expanding by 21 per cent year-on-year to reach Rs 3.93 lakh crore as of December 2023, according to data compiled by Sa-Dhan, an RBI-approved Self-Regulatory Organisation (SRO).

Microfinance Institutions (MFIs) continued to dominate the sector, accounting for 40 per cent of the total portfolio, followed by banks at 32 per cent, Small Finance Banks (SFBs) at 18 per cent, Non-Banking Financial Companies (NBFCs) at 11 per cent, and Non-Profit MFIs at 0.18 per cent.

"The microfinance sector is booming, with improved performance across all parameters. This growth story has been ongoing for the last two quarters and is expected to continue for a few more years," said Jiji Mammen, Executive Director and CEO of Sa-Dhan.

Mammen emphasised the need to expand microfinance services to underserved geographies.

Sa-Dhan has initiated a study, supported by SIDBI, to identify issues related to these regions, and the report is expected to be made public soon.

Additionally, Sa-Dhan has conducted 2,250 workshops across 19 states, covering 1.42 lakh individuals, to raise awareness among micro-borrowers. These workshops were supported by the DEA Fund of the Reserve Bank of India (RBI).

Sa-Dhan is also working to promote micro-enterprises among Self-Help Groups (SHGs) and Joint Liability Groups (JLGs). A project is underway to develop one million enterprises across the country, Mammen added.

As of December 2023, the number of loan accounts serviced by all micro-lenders stood at 14 crore, an increase of 9 per cent year-on-year.

In the third quarter that ended on December 31, 2023, the total disbursement by all micro-lenders grew by 19 per cent to Rs 96,754 crore.

The top five states in terms of portfolio are Bihar (Rs 58,706 crore), Tamil Nadu (Rs 53,304 crore), Uttar Pradesh (Rs 40,770 crore), Karnataka (Rs 37,427 crore), and West Bengal (Rs 35,431 crore), accounting for approximately 57 per cent of the industry's total portfolio.

Among the major states, Uttar Pradesh recorded the highest year-on-year portfolio growth at 38 per cent, followed by Bihar at 35 per cent, Karnataka at 30 per cent, Tamil Nadu at 25 per cent, and Odisha at 24 per cent, all above the industry average of 21 per cent. West Bengal, however, witnessed modest growth of 8 per cent.

The number of districts with a portfolio greater than Rs 2,000 crore has increased significantly from 14 districts in December 2022 to 30 districts in December 2023, with the majority located in Bihar (12 districts), West Bengal (6 districts), Tamil Nadu (5 districts), and Karnataka (4 districts).

(KNN Bureau)