The credit bureau CRIF High Mark's latest report on microfinance, 'Microlend', has it that at end-June 2024, the systemic book at ₹4.32 trillion, marked a quarter-on-quarter decline of 2.3 per cent even though on a year-on-year basis, it is up 20.3 per cent. A closer look at the numbers also shows a rise in delinquencies across all time-bands (or days-past-due as it is called in the trade). Microfinance institutions (MFIs) are applying the brakes.
How did we get here? Is it rampant over-leveraging - of the kind seen in retail lending?
"It's not so. As per bureau data only around 1.5 per cent of the borrowers have loan outstanding in excess of ₹2 lakh with 15 per cent having exposures to more than two lenders," says Alok Misra, chief executive officer (CEO) and director, Microfinance Institutions Network (MFIN). And the regulatory norm that annual loan repayments are not to exceed 50 per cent of households' annual income is a robust check against overleveraging.
That said, "non-reporting of EMIs in retail loans and non-EMI based products like gold loans could lead to underwriting issues".
MFIN (a self-regulatory organisation or SRO for microlending) thought this was serious enough and issued guidelines on October 7 specifying ways to consider missing EMIs in underwriting. Interestingly, this came a week before the Reserve Bank of India's (RBI's) diktat: Asirvad Micro Finance and Arohan Financial Services had to cease and desist from sanction and disbursal of loans, effective October 21. A couple more - DMI Finance, and Navi Finserv - also met the same fate, but they were non-MFIs.
What we are seeing in the MFI space was forewarned.
この記事は Business Standard の November 04, 2024 版に掲載されています。
7 日間の Magzter GOLD 無料トライアルを開始して、何千もの厳選されたプレミアム ストーリー、9,000 以上の雑誌や新聞にアクセスしてください。
すでに購読者です ? サインイン
この記事は Business Standard の November 04, 2024 版に掲載されています。
7 日間の Magzter GOLD 無料トライアルを開始して、何千もの厳選されたプレミアム ストーリー、9,000 以上の雑誌や新聞にアクセスしてください。
すでに購読者です? サインイン
False solutions for climate change
As the ghastly impacts of climate change become more visible in our everyday lives, it is hard to shake off the feeling that one must step up and do something constructive.
Expats to residents, Delhi's air is driving people out
Embassies have stepped up efforts to deal with the situation; WFH option has residents temporarily relocating to their hometowns
Making sense of census
For all marketing professionals working in large companies, the population census of India is a treasure trove of information.
MONEY CAN BUY YOU STARS
What's behind West Asia's multi-billion charm offensive to become a destination for all kinds of sports stars?
Ensure low tracking error, alignment with risk appetite
Exchange-traded funds (ETFs) witnessed a sharp rise in subscriptions in October, with net investments totalling ₹13,441 crore, compared to ₹381 crore in the previous month, according to data from the Association of Mutual Funds in India (Amfi).
Strong order book to stand BEL in good stead
Brokerages mostly positive on the stock
Strong Q2, growth outlook drive gains for Info Edge
The stock of online classified major Info Edge (India) was up over 6 per cent on Friday on expectations of demand improvement for Indian IT companies.
Regulator nod to Roshni Nadar to acquire majority stake in HCLTech
The Securities and Exchange Board of India (Sebi) on Friday gave nod to Roshni Nadar to acquire majority shareholding from her father Shiv Nadar, founder of HCL Group, in two promoter group companies.
Green energy stocks fail to benefit from selloff in Adani Green
Six of the eight stocks operating in the green energy space declined on Friday, failing to benefit from the rout in Adani Green Energy's decline over the last two sessions.
NTPC Green Energy IPO booked 2.40x on Day 3
The initial public offering (IPO) of NTPC Green Energy Ltd, the renewable energy arm of NTPC, was subscribed 2.40 times on the closing day of the share sale on Friday.