
Summary:
Between September 2021 and 2024, the average loan disbursal by Micro Finance Institutions (MFIs) increased by 43%, from Rs. 35,000 to Rs. 50,000 (US$ 406.47-580.67). However, the report raised concerns about delinquencies, particularly among borrowers with loans from multiple lenders or higher credit exposure. Nearly half of unsecured loan borrowers also had another retail loan, and 11% of borrowers had overdue loans.
The report highlights that lenders tightened credit filters in November 2023, following higher risk weights and increased asset quality stress. This led to fewer inquiries, lower approval rates, and a shift towards prime customers, with a reduction in personal loans for lower-income groups. In FY24, banks opened 5,400 branches, with private banks opening most of them in underserved rural-urban areas. Indian banks remain strong with stable loan-to-deposit ratios and healthy credit growth.
Source: IBEF
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