4% decline in microfinance portfolio, yet prospects are not bleak

A CRIF High Mark quarterly analysis of the performance of the microfinance portfolio:

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The microfinance portfolio in the country had a decline of 4% as of December 2024, standing at ₹391.5K crore compared to ₹408K crore a year ago, according to a quarterly report by CRIF High Mark, providing an overview of the micro-lending industry in India. The figure also marks a QoQ decrease of 5.4% since September 2024.

However, the report states that the sector remains in a recovery phase, with preventive measures in place and a strong focus on collections aimed at stabilizing the portfolio.

The report said originations faced additional pressure in Q3 FY25, with significant contractions of 34.9% year-on-year in value and 41.7% year-on-year in volume compared to Q3 FY24.

DROP IN ACTIVE LOANS

It said active loans dropped from 15.7 crore in December 23 to 14.6 crore in December 2024, indicating a decline in supply. The live customer base showed a slight year-on-year increase initially but declined from 8.7 crore in March 2024 to 8.4 crore in December 24, marking a reduction in the active customers.