Microfinance loans rise even as defaults decline – Times of India

by The Technical Blogs

MUMBAI: While banks have been cautious about small-ticket personal loans (under Rs 50,000), the microfinance lending sector, which predominantly caters to small towns and rural regions, has reported an improvement in loan growth and asset quality. RBI defines microfinance lending as collateral-free loans to low-income households (annual income up to Rs 3 lakh).
A report by credit bureau CRIF High Mark showed that the microfinance sector’s outstanding portfolio has reached Rs 3,55,300 crore as of June – a growth of over 24% over the previous year and 5% over the preceding quarter. Urban markets registered year-on-year portfolio growth of nearly 20%, while rural markets logged over 27% growth during the same period.
“This growth can largely be attributed to the large-scale adoption of digitisation by the sector as well as the positive regulatory amendments brought in by RBI that have bridged the gap between rural and urban markets. This sustained growth in the microfinance sector, combined with government impetus for financial inclusion, is expected to create greater opportunities for micro borrowers to access formal credit and become a significant contributor to economic growth,” said CRIF High Mark MD Sanjeet Dawar.

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