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District-wise analysis: West Bengal and Tamil Nadu most penetrated
Microfinance industry has presence in 615 of the total of 725 districts in India, implying 85% penetration. However, 210 districts (~29% of total number of districts) constitute 80% of the portfolio outstanding, as per the latest industry report. Top 30 districts comprises 25% of portfolio outstanding (~Rs400bn) within which ~60% of the districts are based in only two states (West Bengal and Tamil Nadu), which contribute ~68% to total top 30 district exposure. 67 districts each have portfolio outstanding of
* Top 30 districts’ portfolio & delinquency. Top 30 districts comprises 25% of portfolio outstanding (~Rs400bn) within which ~60% of the districts are based in only two states (West Bengal and Tamil Nadu), which contribute nearly 68% to total top 30 district exposure. Most top 30 districts, despite highly penetrated, are having PAR90+ portfolio of <0.5% as at Dec’18. Important to note is that, industry has been able to kept delinquency well under control even during most challenging past couple of years which witnessed series of events such as demonetisation, farm loan wavier, state elections, etc. PAR90+ portfolio remains within manageable levels, reflecting resilience of the industry. Market share of 115 aspirational districts is 14% as at Dec’18.
* NBFC-MFIs continue to maintain their leadership with 38%/45% market share in outstanding loans / active loans respectively as at Dec’18. Over past two years, two interesting trends we have observed in MFI market share are: a) SFBs are losing market share rapidly to NBFC-MFIs and NBFCs as reflected in ~50% decline in their share to 16% as at Dec’18 from 31% in Mar’17; b) NBFC-MFIs and NBFCs have witnessed consistent improvement in their market share to 38%/12% as at Dec’18 from 30%/7% in FY17 respectively. Banks’ market share has broadly remained stable at ~31/33%. While we remain cautious on further market share gain for NBFCs given funding uncertainties, we believe NBFC-MFIs are better placed to gain market share from NBFC and SFBs.
* Loan disbursal by ticket size above Rs60,000 remained lower within broad range of 3-5% of total loans disbursed over past eight quarters. As per the latest MFI report, industry has broadly remained disciplined as reflected in lower share of 3-5% of high ticket (>Rs60,000) disbursal over past eight quarters. The share of loan disbursement below Rs30,000 ticket size stands at 66% as at Dec’18 vs 78% in FY17. We note the MFIN has revised borrower limit to Rs80,000 from Rs60,000 earlier to cover inflation in recent years after six long years. The previous limit was in force since 2013.
* Two states, Tamil Nadu and West Bengal, have outstanding portfolio between Rs150bn-200bn as at Dec’18. Punjab, Haryana and Chhattisgarh are the only three states having outstanding loan portfolio of less than Rs30bn but more than Rs10bn. Assam and West Bengal are amongst the states having outstanding ticket size more than Rs40,000 vs other states having less than Rs30,000.
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