New Delhi, 14 Jan (KNN) There has been a significant dip in the value and volume of rural microfinance loans in FY21.

It constitute 58 per cent of the overall microfinance credit market in India.

According to the CRIF and CII Rural Business Confidence Index October 2021, amid the pandemic a degrowth of 9 per cent was witnessed in loans disbursed by value, the volume also declined by 19 per cent.

In rural India, the total microfinance disbursements in rural India in FY20 stood at 4.26 crore loans amounting to INR 1.44 lakh crore in comparison to 3.2 crore loans involving INR 1.12 lakh crore in FY21.

During the first quarter of FY22, 41.1 lakh loans amounting to INR 14,700 crore. The average ticket size for microfinance loans was INR 35,000, as per the report.

Navin Chandani, MD & CEO, CRIF High Mark pointed out that two-thirds of the workforce live in rural areas, and the rural economy contributes to almost 46 per cent of our national income.

“Undoubtedly, it is the backbone of India’s economic progress. The epidemic has brought about a significant structural shift in the country and rural India displayed exemplary resilience during this phase. With the next few years being critical for the country’s continued economic growth, it is imperative to have a holistic mechanism that can evaluate and forecast rural business sentiment,” added Chandani.

Even as the microfinance expansion in rural India was impacted, the gross loan portfolio (GLP) of the sector across India grew 5.75 per cent year-on-year (YoY) as of September 2021 while Q2 (July-September) growth stood at 2.1 per cent from Q1 in the current FY, a report by Crif MicroLend in December had showed.

The portfolio outstanding had jumped from Rs 235.4k crore as of September last year and Rs 243.8k crore as of June 2021 to Rs 249k crore as of September 2021.

The microfinance sector provides entrepreneurs, small businesses, and individuals access to formal financial services.

The survey was conducted in September and October 2021 by CII among their members operating in rural locations. 48 per cent respondents were large enterprises, 14 per cent were medium businesses, 19 per cent were small enterprises, and 18 per cent were micro units by turnover.