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Microfinance sector shrinks by 4% in the nine-month period

The microfinance sector shrunk 4% in the nine months to December 2020, with the average loan size falling by 10% as lenders turned cautious amid the pandemic that derailed the robust repayment system on which the sector banks on. Combined micro credit portfolio of all lenders stood at Rs 2,27,893 crore at the end of 2020 compared with Rs 2,36,427 crore as of March 31, 2020. Average ticket size fell to Rs 33,227 against Rs 3,6842 over the same period, according to data shared by Sa-Dhan, an industry body. The repayment efficiency ratio, while improved to 85-95% at the end of December from just about 55-60% seen in July, is yet to reach pre-Covid level of 97-99%. Portfolio at risk for 30 days has deteriorated to 13.23% from 1.78% in March 2020.

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