{"id":155869,"date":"2023-08-25T13:24:03","date_gmt":"2023-08-25T07:54:03","guid":{"rendered":"https:\/\/www.gkseries.com\/blog\/?p=155869"},"modified":"2023-08-25T13:24:04","modified_gmt":"2023-08-25T07:54:04","slug":"microfinance-landscape-shift-standalone-mfis-take-lead-with-40-microlending-share","status":"publish","type":"post","link":"https:\/\/www.gkseries.com\/blog\/microfinance-landscape-shift-standalone-mfis-take-lead-with-40-microlending-share\/","title":{"rendered":"Microfinance Landscape Shift: Standalone MFIs Take Lead with 40% Microlending Share"},"content":{"rendered":"\n

Microfinance Landscape Shift: Standalone MFIs Take Lead with 40% Microlending Share:<\/strong> After a four-year hiatus, freestanding Microfinance Institutions (MFIs) have regained their dominance in microlending, surpassing banks. This resurgence is attributed to their recovery from pandemic-induced setbacks and strategic efforts, with standalone MFIs now holding a 40% share of microfinance loans in the country.<\/p>\n\n\n\n

Daily Current Affairs Quiz: August 2023<\/a><\/p>\n\n\n\n

Recovery and Resurgence:<\/strong><\/p>\n\n\n\n

The pandemic had had a significant impact on MFIs, resulting in a significant drop in collections and disbursements. Standalone MFIs have shown remarkable growth, rebounding from a 32% share in FY20 to 40% in FY23. Banks, on the other hand, saw a decline in their microlending<\/strong> share from 44% in FY21 to 34% in FY23.<\/p>\n\n\n\n

Macroeconomic Factors and Growth:<\/strong><\/p>\n\n\n\n

The microfinance industry grew by 37% in FY23, thanks to a favourable macroeconomic environment and increasing demand. This growth translated into higher disbursements and expansion of the microfinancing landscape.<\/p>\n\n\n\n

Empowering Risk-Based Pricing:<\/strong><\/p>\n\n\n\n

The lifting of lending rate ceilings by the Reserve Bank of India enabled MFIs to implement risk-based pricing strategies. This shift led to improved net interest margins (NIMs) and higher returns on total assets, bolstering MFIs\u2019 financial standing.<\/p>\n\n\n\n

Credit Quality and NIM Improvement:<\/strong><\/p>\n\n\n\n

Credit costs have reduced from the peak of FY21 but still remain elevated compared to pre-pandemic levels. Despite obstacles, NIMs are likely to continue rising, reaching 3.8% in FY24, supported by 2.5% regulated credit costs.<\/p>\n\n\n\n

Investor Confidence and Capital Inflow:<\/strong><\/p>\n\n\n\n

MFIs raised almost Rs 3,000 crore in equity in FY23, indicating revived investor interest. This capital infusion signals confidence in the sector\u2019s growth prospects and sustainability.<\/p>\n\n\n\n

Regional Dynamics:<\/strong><\/p>\n\n\n\n

Bihar, Tamil Nadu, Uttar Pradesh, Karnataka, and West Bengal continue to lead the way in terms of MFI Assets Under Management (AUM). Bihar, with a market share of about 15%, stands out as the top state in the microfinance sector.<\/p>\n\n\n\n

Future Outlook:<\/strong><\/p>\n\n\n\n

Care Ratings\u2019 analysis anticipates the growth momentum to persist in the current fiscal year, albeit at a slightly slower pace of 28%. The evolving landscape, fueled by risk-based pricing and improving loan quality, predicts that the microfinance sector will continue to expand and innovate.<\/p>\n","protected":false},"excerpt":{"rendered":"

Microfinance Landscape Shift: Standalone MFIs Take Lead with 40% Microlending Share: After a four-year hiatus, freestanding Microfinance Institutions (MFIs) have regained their dominance in microlending, surpassing banks. This resurgence is attributed to their recovery from pandemic-induced setbacks and strategic efforts, with standalone MFIs now holding a 40% share of microfinance loans in the country. Daily […]<\/p>\n","protected":false},"author":894,"featured_media":155870,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[5142],"tags":[74,107],"class_list":["post-155869","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-current-affairs-august-2023","tag-bank-current-affairs","tag-finance-current-affairs"],"_links":{"self":[{"href":"https:\/\/www.gkseries.com\/blog\/wp-json\/wp\/v2\/posts\/155869","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.gkseries.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.gkseries.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.gkseries.com\/blog\/wp-json\/wp\/v2\/users\/894"}],"replies":[{"embeddable":true,"href":"https:\/\/www.gkseries.com\/blog\/wp-json\/wp\/v2\/comments?post=155869"}],"version-history":[{"count":1,"href":"https:\/\/www.gkseries.com\/blog\/wp-json\/wp\/v2\/posts\/155869\/revisions"}],"predecessor-version":[{"id":155871,"href":"https:\/\/www.gkseries.com\/blog\/wp-json\/wp\/v2\/posts\/155869\/revisions\/155871"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.gkseries.com\/blog\/wp-json\/wp\/v2\/media\/155870"}],"wp:attachment":[{"href":"https:\/\/www.gkseries.com\/blog\/wp-json\/wp\/v2\/media?parent=155869"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.gkseries.com\/blog\/wp-json\/wp\/v2\/categories?post=155869"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.gkseries.com\/blog\/wp-json\/wp\/v2\/tags?post=155869"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}