Delinquency rates for MFIs decline to 0.8% as of October 2013: Equifax

The delinquency rates or delay in loan repayments by borrowers from microfinance institutions (MFIs) continue to improve with the proportion of loan accounts that are outstanding for over 30 days declining by a fifth to 0.8 per cent as of October 31, from 1 per cent in April 2013, according to a report by credit information services firm Equifax. 

This implies the delinquency rates have almost halved since mid-2012 when it was pegged at over 1.5 per cent. 

Equifax aggregates data on industry delinquencies based on the information reported by its members. It counts over 120 MFIs in India, representing more than 90 per cent of the country’s NBFC-MFI industry, as its members.

The MFI sector, which bounced back in FY13 after two years of pain following regulatory flip-flop in its key market, has been gaining growth momentum in the current fiscal with rising fresh disbursals and the decline in delinquency rate is part of the broader trend. 

The MFI space took a hit in 2010 due to a new law in Andhra Pradesh putting severe restrictions on the operations of microfinance firms after complaints that they were adopting coercive loan recovery practices and charging exorbitant interest rates. 

Some firms like SKS Microfinance have offloaded past baggage from the regulatory whack in Andhra Pradesh but others like Basix and Trident are still struggling.

(Edited by Joby Puthuparampil Johnson)

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