60% on year credit growth in eastern states in MFI, reports Kotak Securities

Microfinance institutions witnessed a 60-per cent, on-year credit growth in the east and northeastern states during the quarter ended December, brokerage Kotak Securities said in a report. "NBFC-MFIs saw 60 per cent YoY rise in loans in the states of Assam, Bihar, Jharkhand, Odisha and West Bengal," Kotak Securities said in the note.

The MFI industry in the December quarter grew by 43 per cent year-on-year, but was slower than the 50-per cent rise registered in the second quarter of the 2018-19 fiscal, it said. However, "NBFCs led the QoQ deceleration, probably due to the recent tightness in liquidity conditions," the brokerage said.

The share of loans increased 200 basis points YoY to 37 per cent in the east, and about 53 per cent of the expansion of incremental branch additions were in the region during the period under review, the note said. "The NBFC-MFIs (aligned with MicroFinance Institutions Network) saw a sharp increase in securitisation in overall funding mix to 44 per cent. Within debt funding, the share of bank borrowings increased to 67 per cent," Kotak said.

The MFI Network had said member NBFC-MFIs received a total of Rs 8,235 crore in debt funding in the quarter to December. "The MFI industry is in resurgence phase. Therefore, we are optimistic about better Q4 growth. The industry is expected to grow at 40-45 per cent," said Kuldip Maity, MD and CEO, Village Financial Services Ltd.

(With inputs from agencies.)