HomeMicro FinanceMicrofinance companies expand reach; Bengal, Tamil Nadu most penetrated
Microfinance companies expand reach; Bengal, Tamil Nadu most penetrated
July 21, 2019
The Microfinance industry has a presence in 615 of the total 725 districts, implying 85% penetration. However, 210 districts constitute 80% of the portfolio outstanding, as per the latest industry report. Top 30 districts comprise 25% of portfolio outstanding (`400 bn) within which 60% of the districts are based in West Bengal and Tamil Nadu, which contribute 68% to total top-30 district exposure. 67 districts each have portfolio outstanding of <`10 mn.
Notably, PAR 90+ portfolio of each district within top 30 districts is less than 0.5% except for a couple of districts, which we think is a positive sign. Odisha, Kerala and Uttar Pradesh appear to be stressed given their 37%/22%/16% share respectively in top 30 districts with highest delinquency. We like Bandhan Bank and CreditAccess Grameen within MFI space.
Top 30 districts’ portfolio
Most top 30 districts are having PAR90+ portfolio of <0.5%. Important to note is that industry has been able to keep delinquency well under control even during most challenging past couple of years.
NBFC-MFIs continue to maintain their leadershipOver past two years, two trends we have observed in MFI market share are:
(a) SFBs are losing market share rapidly to NBFC-MFIs and NBFCs as reflected in 50% decline in their share to 16% as at Dec’18 from 31% in Mar’17; (b) NBFC-MFIs and NBFCs have witnessed consistent improvement in their market share to 38%/12% from 30%/7%, respectively. Banks’ market share has broadly remained stable at ~31/33%.
High-ticket disbursal share lower
As per the latest MFI report, industry has broadly remained disciplined as reflected in lower share of 3-5% of high-ticket (>`60,000) disbursal over past eight quarters. The share of loan disbursement below `30,000 ticket size stands at 66% as at Dec’18 vs 78% in FY17.