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NBFC-MFIs outpace banks to grab share in microfinance market

December 14, 2022

NBFC-MFIs outpace banks to grab share in microfinance market
NBFC-MFIs has outpaced banks for the first time in years and picked up a dominating share in the microfinance sector accounting for nearly 38 per cent of the industry while banks have slipped to the second position with close to 36 per cent market share.

According to the latest quarterly report compiled by Sa-Dhan, the association of inclusive finance institutions and SRO(Self regulatory organisations) for microfinance sector, the microfinance industry clocked nearly 20 per cent growth in the second quarter of the current fiscal compared to the same period last year.

Barring banks, portfolio of all lenders recorded double-digit growth. NBFCs and NFPs (not-for-profit MFIs) have shown significant growth of around 59 per cent and 48 per cent respectively, while NBFC-MFIs and SFBs (Small finance banks) posted a growth of around 29 per cent and 21 per cent respectively, the report said. Banks continue with much slower growth at around 5 per cent. Banks and NBFCs have shown a decline of GLP (gross loan portfolio) sequentially over the first quarter of the current fiscal.

“For the first time in years, the NBFC-MFI market share is dominating the sector with 38 per cent, while banks have slipped to No. 2 position with 36 per cent market share. Meanwhile, SFBs, NBFCs, and NFPs account for around 17 per cent, 9 per cent and one per cent respectively,” it said.

According to Jiji Mammen, ED and CEO, Sa-Dhan, if the data for Q2 is any indication, the microfinance sector is on a definite growth path in this financial year. After the lag due to pandemic and then change to the new regulatory framework, the sector has regained its momentum and is likely to register greater growth in the coming quarters.

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