If you notice, for last few year there is a huge increase in microfinance portfolio of all the companies. Microfinance has this peculiar thing that in good time, asset quality of these companies will be quite low, but when thing go bad, they happen in very short span of time. For achieving the growth, these companies tend to give loan to some customers who already have got some loan with other companies. Even though each company is is giving something like 50000 only to the customer, when many companies lend to same customer, suddenly customer is over levered. Below pic sums up what happening
In the pool of fusion customers, by the end of FY23, customers having loans from more than 4 lenders is 6%, but by end of FY24, customers having loans more than 4 lenders is 24%. Now Fusion and Spandana showed higher detoriation, but the general trend is NPA is increasing in all lenders. If you read Equitas concall, the openly stated that microfinance lenders are following bad practices(please read equitas Q1FY25 concall, you will get more clarity)
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