Microfinance Lenders In Assam See The Biggest Jump In Stressed Assets In Q3

Microlenders in Assam saw the highest repayment stress among the top 10 states as “socio-political factors” affected India’s northeast, according to a credit bureau report.

Around 16.1 percent of the portfolio of microfinance lenders in the state witnessed repayment stress—portfolio at risk with 1-30 days past due—as of December 2019 compared with 2.3 percent as of September, CRIF High Mark said in its report. That’s the highest among the top 10 states that account for 83 percent of the national gross loan portfolio and also 8.5 times the national average of 1.9 percent.

Loan assets of microfinance lenders in Assam under the 31-180 days past due category stood at 6 percent at the end of third quarter compared to 2.8 percent as of September, it said.

That comes as the northeast India witnessed unrest after the Citizenship Amendment Bill was passed in Parliament. The changed law grants citizenship to non-Muslim refugees who entered India before 2015. Earlier, ICRA Ltd. flagged increase in delinquencies for banks and microfinance lenders across the state because of the protests.

The northeastern region—which has the smallest share of gross loan portfolio at 7 percent—faced high early repayment stress at 10.3 percent compared with 1.9 percent on a pan-India level, CRIF High Mark said.

At the national level, portfolio at risk in 1-30 days and 31-180 days past due category saw an increase on a sequential basis. Overall write-offs for the December quarter stood at 1.4 percent of the portfolio, 10 basis points higher than the previous quarter.

Growth Rebounds

The gross loan portfolio growth of the microfinance sector, however, bounced back after two quarters of decline. The loan book of microfinance lenders across the country grew 8.5 percent in the third quarter, it contracted 3 percent sequentially in the northeastern region, according to the report. Overall loan portfolio of microfinance lenders in Assam fell 5 percent sequentially to Rs 11,700 crore during the quarter.

Other key highlights from the report:

• Average ticket size of microfinance loans stood at Rs 33,200 in the third quarter, an increase of 10.3 percent on a yearly basis.
• The average microfinance exposure per borrower grew 5 percent year-on-year to Rs 35,800 as of December 2019.
• West Bengal continued to be the most overleveraged state with the highest average exposure per borrower, thought it declined from Rs 42,220 in in the second quarter to Rs 42,020 in the third quarter. The state also has the highest average ticket size in December 2019 with a year-on-year growth of 9 percent to Rs 43,500.
• As of December 2019, the share of ticket size of Rs 30,000-40,000 surpassed that of Rs 25,000-30,000 to become the largest in the national portfolio at 27.3 percent.
• Microfinance lenders’ gross loan portfolio in rural India grew 10 percent in the third quarter compared to 1.6 percent in the previous quarter.
• In urban areas, it grew 6.6 percent in the December quarter against 1 percent in the previous quarter.