ANALYSIS OF VARIOUS SEGMENTS
Microfinance
Industry GLP recorded a CAGR of 24% since Fiscal 2017

The microfinance industry has recorded healthy growth in the past few years, and the industry’s Gross Loan Portfolio
(GLP) grew at a CAGR of 24% since Fiscal 2017.

GLP clocked 24% CAGR between fiscals 2017 and 2020

{Rs billion)
3,500 - 3,258
3,000 | 2th CAGE 2,804
2500 | 2,154
2000 4,708
1500 |
‘000 |
500 i
” FYI7 FY18, FY19 FY20E

Note: E Estimated. Data includes data for banks lending through SHG and joint liability group (LG), SFBs, NBFC-MFls, other NBFCs and non-
(profit MFla. The amounts are as at the end of fiscal year

Source: Company reports, GRISIL Research, industry

The industry has grown despite adverse developments in the past decade such as national farm loan waivers (2008), the
Andhra Pradesh crisis (2010), Andhra Pradesh farm loan waiver (2014), demonetization (2016), and farm loan waiver
across some more states (in 2017 and 2018). The liquidity crisis in 2018, however, has had a ripple effect on microfinance
lending as smaller NBFC-MFIs with capital constraints and lenders relying on NBFCs for funding slowed down
disbursements. With the COVID-19 pandemic, NBFC-MFIs may face asset quality and liquidity stress in the current
fiscal. However, the industry is expected to rebound and grow at a healthy pace over the next few years as well, given the
low penetration of credit among the target population.

MFI industry has shown resilience over the past decade

 

 

FYOTE FYOSE FYOOE FYIOE FYtt FYI2 FYI FYI¢ FYIS FYI6 FYIT FYIS FYI9 Q2FY19Q3FY20
mE GLP GLP growth

‘Note: Data includes values for NBFCs, NEFC-MFls, non-profit MFis, SFBs_ and Bharat Financial Inctusion
‘Source: CRISIL Research, MFIN, Bharat Microfinance

On November 8, 2016, the Indian government announced the demonetization of banknotes of %500 and 21,000

denominations. Approximately 86% of the currency in value terms was removed from circulation. As a consequence,
GLP of the MFI industry, which was growing at approximately 70% in the first half of Fiscal 2017 suddenly declined to

125
