The loss in market share took place even before the RBI liberalised rules on lending to this sector — lifting the cap on interest rates charged. The new rules are expected to enable NBFC-MFIs to be more competitive and gain market share.
According to Microlend report, 88.5% of microlending is undertaken by banks and NBFCs-MFIs with 11.5% of loans being advanced by other lenders. Microlend is a quarterly report on microfinance lending published by credit bureau CRIF High Mark Credit Information Services. The crisis in the NBFC segment had resulted in the share of banks going up. However, NBFC-MFIs are now regaining lost ground.
As of December 2021, microfinance grew 5.9% quarter-on-quarter and 10.4% year-on-year. However, this was largely due to an increase in the loan size as the live customer base grew only 0.7% Q-o-Q, while the Y-o-Y growth on the customer base was 1.7%.
During October-December 2021, NBFC-MFI loan originations amounted to Rs 57,600 crore in value through 1.5 crore loans. There was a quarterly growth of 4% in average balance per account and 5.2% in average balance per unique customer as of December 2021.
