Calibrated outreach of microfinance is needed for continued effectiveness: CRIF High Mark – DFID – SIDBI study

CRIF High Mark was the lead presenter in a session titled “Concentrated Outreach of Microfinance: is there a new bubble in the making?” at the Inclusive Finance India Summit in New Delhi in December. Mr Subhrangshu Chattopadhyay (VP – CRIF High Mark) shared the following insights in his presentation***:

Insights on outreach:
•    4.62cr borrowers have accessed microfinance, of whom 2.6cr are actively servicing a microfinance loan (~ 27% households).
•    More than 60% of all borrowers in states such as WB, UP, Bihar are servicing a microfinance loan.
•    1 in every 3 borrowers actively servicing a microfinance loan is a first time borrower i.e. 0.85cr borrowers have availed microfinance for the first time between Jul’14 – Jun’15, with significant additions in MP, Bihar & Gujarat.
•    Average ticket size of a microfinance loan is north of 20K with states such as WB, Assam witnessing increase of 20% YOY.

Insights on risk profile:
•    Portfolio at Risk (31-180 days past due) is 0.19%. However, portfolio quality has worsened in WB, UP, Odisha & Assam between Dec’14 & Jun’15. If the 180+ book is included, 1.6% of GLP is more than 30 days past due.
•    Despite the healthy PAR, number of units that are more than 30 days past due have increased. Between Dec’14 & Jun’15, nearly 3L additional units have crossed the threshold of 30 days past due.

Insights on credit concentration:
•    While 3% of all borrowers are servicing loans from more than 2 lenders, 9% of all borrowers are servicing more than 2 loans. This trend is also now being witnessed in a relatively greenfield state such as MP, where 4% borrowers are servicing more than 2 loans & also servicing loans from more than 2 lenders.
•    Concentration is also being witnessed in states such as WB & Assam where ticket sizes have increased by ~ 20% while growth rate of first time borrowers have been the least.  
•    I in every 5 past due loan is due to a borrower servicing loan from more than 2 lenders.
•    In some state, about 1.7% of all borrowers are getting a second loan within a week of their previous loan being sanctioned.
•    While microfinance hasn’t reached ~ 110 districts, the TOP 15 TALUKS represent 7% of the industry GLP

***
A)    Study based on data in CRIF High Mark Credit bureau as of June’2015
B)    Study conducted on top 10 states in terms of Gross Loan Portfolio (GLP)