Sa-Dhan, India’s premier body of development finance institutions has released it’s the latest report on the status of microfinance in India for the FY2015-16. The report titled the Bharat Microfinance Report provides the latest data and statistics about the micro-finance sector in India. The much-anticipated report serves as a barometer of the sector for Indian MFI’s, researchers, regulators and policymakers.
You can download the latest version of the report at the link below. The next report with up-to-date statistics on Indian Microfinance Companies will be released in September 2017.
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Highlights of the Report are given below :
Growth and Outreach
MFIs currently operate in 29 States, 4 Union Territories and 588 districts in India. The reported 166 MFIs with a branch network of 12,221 employees have reached out to an all-time high of 39 million clients with an outstanding loan portfolio of Rs63,853 crore. This includes a managed portfolio of Rs 16,914 crore. Out of the managed portfolio, the BC portfolio accounts for Rs 7,984 crore. The average loan outstanding per borrower stood at Rs 11,425 and 94% of loans were used for income generation purposes.
Outreach grew by 8% and loan outstanding grew by 31% over the previous year. The Southern region continues to have the highest share of both outreach and loans outstanding, followed by East. However, growth rates are higher in the Northeastern and Central regions. The outreach proportion of urban clientele has decreased marginally as against the rural population. The proportion of urban clientele which was 67% in 2014-15 decreased to 62% in 2015-16. Women borrowers constitute 97% of the total clientele of MFIs, SC/ST borrowers constitute 30% and minorities 27%.
Of the total, NBFC-MFIs contribute to 85% of client outreach and 88% of an outstanding portfolio, while NGO MFIs contribute to the remaining. MFIs with a portfolio size of more than Rs 500 crore contribute significantly to the total outreach (85%) and loan outstanding (88%) of the sector.
Operational and Financial Aspects
MFI sector employs 1,03,415 personnel, out of which 15% are women, and 62% are field staff. An active borrower per credit officer (ABCO) is 440, which is higher than the previous year indicating a higher focus on client services without much of staff growth.
Financial expense is the major expense (53%) incurred by MFIs. Personnel expense and other administrative expenses contribute 24% and 23% respectively. Median OER (Operating Expense Ratio) and FCR (Finance Cost Ratio) remained at 10.2% and 13.83% respectively. It is seen that the OER comes down with the scale of operation. MFIs, with a portfolio of more than Rs 500 crore have a median OER of 7.5% and FCR of 13.9%.
The Yield of the sector for the year was 21%, which is the highest for Section 8 Companies and Cooperatives (24%) and lowest for the Society/Trust (20%). The Margin for different types of institutions was in the range of 9 -12%. NBFC-MFIs maintained a median margin of 10%. Median OSS (Operational Self Sufficiency) is 113%. Approximately 16% of MFIs have OSS less than 100%. This includes 4% of the NBFCMFIs on account of AP portfolio and 12% not-for-profit MFIs. Generally, the OSS improves with the average loan size and yield of the institution.
Median ROA and ROE for the sector remained at 2.2% and 11.6% respectively. The returns are generally higher for not for profit MFIs and very large-sized MFIs.
The CAR (Capital Adequacy Ratio) for all types of MFIs remained above the desirable level of 15%. NBFCMFI’s have a CAR of 20.1%. Leveraging of the sector was 3.2. The sector received a sum of Rs 39,331 crore, which includes a portfolio sale of Rs 8,834 crore. Total outstanding borrowing of MFIs stood at Rs 44,822 crore, with a substantial share of this derived by NBFC-MFIs (97%) especially from the very large MFIs (87%).
Self-Help Groups and the BC model
The number of SHGs linked to credit and bank loan amounts to SHGs has witnessed an increasing trend after 2010-11. The number of saving linked SHGs has also n increased during the year.; to date, 103 million families have been covered under the SBLP program with a total number of 79.03 lakh SHGs with a saving amount of Rs 13,691 crores. A total of 46 lakh SHGs have a gross loan outstanding of Rs 57,119 crores. The amount of savings and the average per SHG savings (Rs 14,662) held in the banking system are both increasing since 2011-12. Average loan disbursed per SHG for 2015-16 is reported at Rs 203,526 when eas average loan outstanding per SHG stood at Rs122,258
The aggregate NPA of SHG loans remains a concern though it has declined marginally by 0.59% from 7.4% in 2014-15 to 6.4% in 2015-16. Quality of SHGs, their performance has emerged as one of the major issues affecting the movement.
Also, the fact that NRLM will push for improvement in the SHG bank linkage with better monitoring, lower rates of interest and a sharper focus on livelihood generation, would give a greater fillip to the growth of the SHG programme.
MFIs are finding the BC model increasingly attractive to carry out their activities on the credit side and to spread it to deposit-taking activities 51MFIs had exposure to a BC loan portfolio of Rs 7,191 crores through linkage to 25 banks. Apart from these 13 MFIs were undertaking deposit related activities for 13 banks. The deposit portfolio of BCs amounted to Rs 871 crores.