Navigating Challenges: The Microloans Sector's Path to Resilience
The microloans sector has faced a 14% decline in its portfolio, showcasing challenging asset quality. Despite a reduction in the number of active loans and stricter lending practices, early-stage performance improvements offer hope. Industry adjustments aim for sustainable growth amid a cautious economic environment.
- Country:
- India
The microloans sector witnessed a significant 14% reduction in its portfolio year-on-year, ending at Rs 3.81 lakh crore by the end of March, as reported by Crif High Mark. This decline underscores ongoing asset quality challenges despite slight improvements in early delinquency rates.
Serving largely the financially vulnerable, the sector struggled due to over-leveraging and multiple lending issues among borrowers. Various strategic measures, such as capping borrower-lender relationships, have been enacted to mitigate asset quality deterioration.
The region-specific economic climate, notably in Tamil Nadu and Karnataka, saw lenders retract faster due to legislative threats. However, the sector now aims for long-term sustainability by prioritizing higher-quality credit, indicating resilience and a shift towards inclusive growth.
(With inputs from agencies.)
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