Micro Loans Surge by 27% Amidst Growing Unsecured Lending Concerns

The micro loans portfolio of various lenders grew by 27 per cent year-on-year for the March 2024 quarter, according to a report by Crif High Mark. Despite overall growth, there has been a slight increase in loan defaults. Unsecured personal loans saw the second-fastest growth among retail assets.

The micro loans portfolio of various lenders saw a significant growth of 27 per cent year-on-year for the March 2024 quarter, reports Crif High Mark.

Despite an upward trend for numerous quarters, stress levels in terms of loan defaults marginally increased during the latest quarter. The report highlighted that microfinance borrowers' personal loan outstandings experienced the second fastest growth among retail assets, soaring by over 38 per cent.

Gross loan portfolios swelled to Rs 4.42 lakh crore in March, with the growth rate being 8.5 per cent compared to the December quarter. Bengal, Bihar, and Uttar Pradesh emerged as the fastest-growing states in this sector.

However, overdue loans between 31 days and 180 days escalated to 2.1 per cent in March from 2 per cent in December 2023. The report pinpointed Tirunelveli, Coimbatore, and Madurai in Tamil Nadu as districts grappling with high asset quality stress.

While Tamil Nadu recorded the highest average borrower balances, Karnataka led in active loans. Additionally, gold loans maintained popularity, featuring 41.2 lakh active loans with an outstanding portfolio of Rs 35,679 crore.

The Non-Banking Finance Company-MFI segment commanded a significant market share at 39.2 per cent.

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