Rapid growth of MFIs’ gross loan portfolio sets alarm bells ringing in India

Friday, July 1, 2016

Mumbai —  Microfinance companies extended heavier loans to their customers in the last financial year, data showed, raising concerns the sector that emerged from a crisis not far ago may be growing too fast yet again for its own good.

The loan portfolio of microfinance institutions (MFIs) stood at Rs.53,233 crore as of 31 March 2016, up from Rs.28,940 crore a year ago, according to data from the Microfinance Institutions Network (MFIN), a self-regulatory organization for the industry. However, this 84% jump in loans comes against a much more modest 44% increase in the number of clients, suggesting the average loan per customer is on the rise.

The number of branches and employees too have grown much slower during the year, at 22% and 36% respectively.

Source: LiveMint (link opens in a new window)

financial inclusion, microfinance