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The Hindu
4 days ago
- Business
- The Hindu
Tamil Nadu sees drop in microfinance gross loan portfolio in fiscal 2025
The Gross Loan Portfolio (GLP) of the microfinance industry in Tamil Nadu has declined in fiscal 2025, influenced by anticipated ordinances and increased regulatory intervention on collection practices, according to CRIF High Mark, a credit bureau. According to data from CRIF, the GLP in Tamil Nadu declined by 19.6% to ₹46,800 crore in fiscal 2025, from ₹58,200 crore in fiscal 2024. On a quarter-on-quarter basis, the GLP fell 7.7%, from ₹50,700 crore. Tamil Nadu (-7.7%, quarter-on-quarter basis), followed by Karnataka (-7.0% quarter-on-quarter basis), recorded steep GLP decline. State-level data revealed notable contractions in Tamil Nadu and Karnataka portfolios, influenced by anticipated ordinances and increased regulatory intervention on collection practices, the credit bureau said. Overall, the microfinance industry's GLP stood at ₹381.2K crore as of March 2025, marking a 2.6% decline quarter-on-quarter and a 13.9% drop year-on-year. The Tamil Nadu government has proposed to come out with a legislation aimed at fair collection and recovery practices, signalling further regulatory shifts in the sector, the further impact of which is yet to be seen, CRIF said. In April 2025, the Tamil Nadu Legislative Assembly passed the Tamil Nadu Money Lending (Prevention of Coercive Actions) Act, 2025. The Bill aims to protect and relieve the economically weaker and vulnerable groups and individuals from the undue hardship of coercive means of recovery of any loans by money-lending lending entities, such as microfinance institutions, money-lending agencies, and money-lending organisations. 'The fall in the gross loan portfolio was in line with the national trend. There were numerous factors involved, including the elections, impact of heatwaves and cyclones in some parts, and also over-leverage by borrowers in certain pockets affecting recoveries,' according to Jiji Mammen, executive director and CEO of Sa-Dhan, a self-regulatory organisation for the microfinance industry. The proposed Tamil Nadu legislation clearly excludes regulated entities. He claimed that with the passing of the Bill, some people in certain pockets have tried to take advantage of it by refusing to pay; however, overall, business has remained normal. Sa-Dhan has made a representation to the State government regarding the inclusion of all types of lenders under the 'coercive' clause in the Bill, which can get misrepresented. 'We have sought suitable amendments when the rules are framed to exclude regulated entities from the coercive clause,' he added. Aditi Singh, chief strategy officer, Satin Credit Network Ltd, which has a portfolio of ₹227 crore in Tamil Nadu, said during the initial discussions around the Bill, 'we took a cautious approach by slowing down disbursements in Tamil Nadu to evaluate the on-ground situation. However, after assessing the situation and seeing there is normalcy at the ground level, we gradually resumed business operations.'
United News of India
04-05-2025
- Business
- United News of India
BOI signs MoU with Sa-Dhan to boost financing for small, micro and women-led enterprises
Kolkata, May 03 (UNI) Bank of India has signed a Memorandum of Understanding (MoU) with Sa-Dhan, an RBI-appointed self-regulatory for microfinance and impact finance institutions, to enhance financing access for small, micro and women-led enterprises. The two organisations will collaborate to achieve key National Financial Inclusion and Sustainable Development Goals (SDGs). The MoU is a non-commercial arrangement outlining key areas of collaboration, including enterprise finance for SHGs and non-SHG members, climate-resilient technologies and green financing, WASH (Water, Sanitation and Hygiene) financing, co-lending to MFIs, digital transformation and technology adoption, and, most importantly, financial literacy and awareness of government schemes. The MoU aims to enhance collaboration with microfinance institutions to provide affordable, flexible financing to underserved communities, particularly women entrepreneurs. Loan disbursement and monitoring will be enabled through digital platforms. Bank of India and Sa-Dhan will drive initiatives to raise awareness of government schemes, financial services, and social security programmes among rural entrepreneurs. Bank of India Executive Director P.R. Rajagopal said, 'BOI's partnership with Sa-Dhan will strengthen small, micro and women-led enterprises by enabling timely and seamless access to finance, and supporting key financial inclusion and sustainable development goals. It will benefit SHG and non-SHG members, promote climate-resilient technologies through green financing, and expand the scope of WASH and digital literacy initiatives.' Jiji Mammen, Executive Director and CEO, Sa-Dhan, said, 'Our collaboration with Bank of India marks a significant step toward equitable access to affordable finance for enterprises, including SHGs and non-SHGs, while achieving sustainable development goals such as climate financing. Coupled with digital adoption and financial literacy, we aim to expand enterprise financing to rural and semi-urban areas, empowering small businesses and women-led enterprises with flexible lending for inclusive development.' UNI SJC
Time of India
29-04-2025
- Business
- Time of India
New guardrails in place to check Microfinance stress
Live Events (You can now subscribe to our (You can now subscribe to our ETMarkets WhatsApp channel Kolkata: Microfinance self regulator Sa-Dhan has tightened the guardrails as the asset quality stress continues to bother the lenders to the bottom of the pyramid sector may see fresh delinquencies especially from Tamil Nadu with the state government planning to enact a law to regulate microfinance operations in the state, in line with what Karnataka did a couple of months back. Tamil Nadu accounted for nearly 11% of the sectoral gross loan portfolio of Rs 3.92 lakh crore at the end of December last has told its members to stop giving top-up loans to borrowers who have not repaid at least 50% of the existing loans and capped processing fees at 1.5% of a loan. The institution has reiterated that the number of lenders per microloan borrower shall not exceed three and asked members to verify whether the loans are utilised for the purpose these are new guideline will be applicable from June are part of a set of 10 guardrails, many of which are already in force. A few guardrails like three-lender cap or limiting the household loan exposure to Rs 2 lakh including retail loans were earlier prescribed by Microfinance Institutions Network, another self-regulator for the new set of rules are being prescribed after a conference with chief executives of microfinance lenders last week.'The association holds that stronger guidelines should be introduced for lending institutions to safeguard the microfinance sector and, in particular, its clients," Sa-Dhan executive director Jiji Mammen said. He underscored on addressing three key issues on a continuous basis -- transparent and fair pricing, prevention of over-indebtedness and adherence to responsible lending guardrails include mandatory credit bureau check at the household level, no loan to default borrowers with more than 60 days due and total outstanding such loan exceeds Rs 3,000, introduction of PAN card as the primary microfinance sector is facing yet another asset quality crisis with the sector's gross non-performing assets ratio climbing to 13.2% of the gross loan of Rs 3.92 lakh crore as of December 31, Nadu may become the fresh stress-point for the sector with the government trying to regulate lending activities to the economically weaker section."We believe this would be targeted towards the unregulated lenders. However, this would create some disruptions as seen in Karnataka," a person aware of the matter said.
Economic Times
28-04-2025
- Business
- Economic Times
New microfinance guardrails from June 1 while Tamil Nadu plans to regulate recovery operations
The microfinance sector is facing yet another asset quality crisis with the sector's gross non-performing assets ratio climbing to 13.2% of the gross loan of Rs 3.92 lakh crore as of December 31, 2024. Sa-Dhan has tightened microfinance regulations amid rising asset quality concerns, particularly with potential disruptions in Tamil Nadu due to new state regulations. The new guidelines, effective June 1, include restrictions on top-up loans, processing fees, and the number of lenders per borrower. These measures aim to address over-indebtedness and promote responsible lending practices within the sector, which faces a 13. Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads Kolkata: Microfinance self regulator Sa-Dhan has tightened the guardrails as the asset quality stress continues to bother the lenders to the bottom of the pyramid sector may see fresh delinquencies especially from Tamil Nadu with the state government planning to enact a law to regulate microfinance operations in the state, in line with what Karnataka did a couple of months back. Tamil Nadu accounted for nearly 11% of the sectoral gross loan portfolio of Rs 3.92 lakh crore at the end of December last has told its members to stop giving top-up loans to borrowers who have not repaid at least 50% of the existing loans and capped processing fees at 1.5% of a loan. The institution has reiterated that the number of lenders per microloan borrower shall not exceed three and asked members to verify whether the loans are utilised for the purpose these are new guideline will be applicable from June are part of a set of 10 guardrails, many of which are already in force. A few guardrails like three-lender cap or limiting the household loan exposure to Rs 2 lakh including retail loans were earlier prescribed by Microfinance Institutions Network, another self-regulator for the new set of rules are being prescribed after a conference with chief executives of microfinance lenders last week.'The association holds that stronger guidelines should be introduced for lending institutions to safeguard the microfinance sector and, in particular, its clients," Sa-Dhan executive director Jiji Mammen said. He underscored on addressing three key issues on a continuous basis -- transparent and fair pricing, prevention of over-indebtedness and adherence to responsible lending guardrails include mandatory credit bureau check at the household level, no loan to default borrowers with more than 60 days due and total outstanding such loan exceeds Rs 3,000, introduction of PAN card as the primary microfinance sector is facing yet another asset quality crisis with the sector's gross non-performing assets ratio climbing to 13.2% of the gross loan of Rs 3.92 lakh crore as of December 31, Nadu may become the fresh stress-point for the sector with the government trying to regulate lending activities to the economically weaker section."We believe this would be targeted towards the unregulated lenders. However, this would create some disruptions as seen in Karnataka," a person aware of the matter said.
Time of India
28-04-2025
- Business
- Time of India
New microfinance guardrails from June 1 while Tamil Nadu plans to regulate recovery operations
The microfinance sector is facing yet another asset quality crisis with the sector's gross non-performing assets ratio climbing to 13.2% of the gross loan of Rs 3.92 lakh crore as of December 31, 2024. Sa-Dhan has tightened microfinance regulations amid rising asset quality concerns, particularly with potential disruptions in Tamil Nadu due to new state regulations. The new guidelines, effective June 1, include restrictions on top-up loans, processing fees, and the number of lenders per borrower. These measures aim to address over-indebtedness and promote responsible lending practices within the sector, which faces a 13. Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads Kolkata: Microfinance self regulator Sa-Dhan has tightened the guardrails as the asset quality stress continues to bother the lenders to the bottom of the pyramid sector may see fresh delinquencies especially from Tamil Nadu with the state government planning to enact a law to regulate microfinance operations in the state, in line with what Karnataka did a couple of months back. Tamil Nadu accounted for nearly 11% of the sectoral gross loan portfolio of Rs 3.92 lakh crore at the end of December last has told its members to stop giving top-up loans to borrowers who have not repaid at least 50% of the existing loans and capped processing fees at 1.5% of a loan. The institution has reiterated that the number of lenders per microloan borrower shall not exceed three and asked members to verify whether the loans are utilised for the purpose these are new guideline will be applicable from June are part of a set of 10 guardrails, many of which are already in force. A few guardrails like three-lender cap or limiting the household loan exposure to Rs 2 lakh including retail loans were earlier prescribed by Microfinance Institutions Network, another self-regulator for the new set of rules are being prescribed after a conference with chief executives of microfinance lenders last week.'The association holds that stronger guidelines should be introduced for lending institutions to safeguard the microfinance sector and, in particular, its clients," Sa-Dhan executive director Jiji Mammen said. He underscored on addressing three key issues on a continuous basis -- transparent and fair pricing, prevention of over-indebtedness and adherence to responsible lending guardrails include mandatory credit bureau check at the household level, no loan to default borrowers with more than 60 days due and total outstanding such loan exceeds Rs 3,000, introduction of PAN card as the primary microfinance sector is facing yet another asset quality crisis with the sector's gross non-performing assets ratio climbing to 13.2% of the gross loan of Rs 3.92 lakh crore as of December 31, Nadu may become the fresh stress-point for the sector with the government trying to regulate lending activities to the economically weaker section."We believe this would be targeted towards the unregulated lenders. However, this would create some disruptions as seen in Karnataka," a person aware of the matter said.
