Women amount to 98% of MFIs total clientele: Economic Survey

Microfinance in India is largely a woman-focused activity with females accounting for 98% of Microfinance Institution’s (MFI) total clientele. Furthermore, MFIs also serve other weakened and marginalised sections such as the scheduled castes (SC), scheduled tribes (ST), and other minority groups, the Economic Survey revealed on Monday.

The share of MFI activity in rural areas grew to 74% in FY23 in contrast to the 26% posted by the urban borrowers.

India has 213 MFIs operating as of FY23. These institutions engage 2.2 lakh employees. Together, they have reached out to over 532 lakh clients with a total outstanding loan of ₹1.8 lakh crore under micro-credit, the survey read.

The Indian microfinance sector is the second largest in terms of number of borrowing customers, preceding China. It is about three times larger than Indonesia’s microfinance sector, which is ranked third on the list, the survey stated.

The microfinance sector covers more than 50% of households and 10% of the Indian population.

In FY23 the microfinance sector achieved a total disbursement of ₹1.8 lakh crore, 55% higher than the previous year’s ₹1.1 lakh crore.

As per the report, the total assets of the MFIs stood at ₹1.5 lakh crore at the end of FY23, 30% higher than the previous year. The Return on Assets (RoA) and Return on Equity (RoE) stood at 2.5% and 12.2% for all MFIs, reflecting an improvement over the previous year. The capital adequacy of Indian MFIs is largely well above the prescribed norms of 15%, with the median CAR for FY23 at 26.5%.

“The improvement in the RBI’s Financial Inclusion Index from 60.1 in March 2023 to 64.2 in March 2024 indicates the strides being made in the area of access, usage, and quality of the financial sector in India,” the report said.