Banks Shift Microfinance Lending Toward Institutions, Report Finds

Banks gave fewer microfinance loans directly to individual borrowers during the April-June quarter.

Their direct lending portfolio dropped sharply from the previous year.

Instead, banks provided more money to microfinance institutions, which then lend to borrowers.

Banks made up most of the money borrowed by these institutions.

The total microfinance market also became smaller.

There were fewer active loan accounts, but the average loan size increased.

Non-bank microfinance institutions remained the biggest providers of these loans.

Their late repayments in the 31-to-180-day period also improved.

Bihar was the largest microfinance market, followed by Uttar Pradesh and Tamil Nadu.