India Business Journal - Microfinance loans plunge in December 2024 quarter as norms get stringent

INDUSTRY

Microfinance loans plunge in December 2024 quarter as norms get stringent

IBJ Bureau
Apr 02, 2025

Number of microfinance loans disbursed by lenders declined 41.7 per cent to 1.19 crore in the December 2024 quarter, according to a report by credit information company Crif High Mark.

The amount disbursed to the borrowers, who come from the poor and marginalised communities, declined by 34.9 per cent to Rs 63,440 crore as against Rs 97,400 crore in the year-ago period.

Loans unpaid for 31 to 180 days jumped to 6.4 per cent of the portfolio at the end of December 2024 from the 2 per cent level in the year-ago period, the Crif report said.

The overall portfolio declined by 4 per cent on the year and by 5.4 per cent on the quarter to Rs 3.91 lakh crore, the report said, attributing it to industry calibrations, including regulatory guidelines, risk re-alignment and changes in underwriting and collection strategies.

Crif said that the ongoing shifts on the metrics may have its origins in the moves undertaken by the industry lately.

“Stricter regulatory guidelines, such as caps on the number of lenders per borrower, have significantly reduced portfolio exposure for borrowers with multiple lender associations,” it said.

Borrowers with five or more lender associations experienced a sharp 36 per cent drop on the year in exposure, it said.

Number of active loans dropped to 14.6 crore in the December 2024 quarter from 15.7 crore a year ago.