MFIs see higher growth in urban India than rural: Report

Over the last year, microfinance institutions (MFIs) have seen their business grow faster in urban India than in rural, according to an annual report by Sa-Dhan, the self-regulatory body for MFIs.

In addition, the report finds that these loans are being put to increasingly productive uses with a higher proportion of them going towards income generation than before.

“In 2016, total loan amount disbursed increased by Rs.13,433 crore over 2015, there is a growth of 23 per cent where amount increased in rural areas by 14 per cent and in urban areas by 27 per cent,” the Bharat Microfinance Report 2016 said.

The report also found that 94 per cent of the loans disbursed in 2015-16 were used for income-generating purposes, up from 80 per cent in the previous year.

Income generation

“In 2011, RBI (Reserve Bank of India) regulation stipulated that a minimum of 70 per cent of the MFI loans are to be deployed for income generating activities,” the report said.

“Analysis of the loan portfolio held by reporting MFIs for 2014-15 and 2015-16 shows that the proportion of income generation loan to non income generation loan is 94:06.”

Within the income-generating loans, the report found that the largest proportion—39 per cent—went to the animal husbandry sector, followed by 29 per cent to the trading & small business category.

Agriculture received 15 per cent of the loans, according to the report.

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