KARACHI: The size of all outstanding loans of the microfinance industry crossed the Rs500 billion mark for the first time in the January-March quarter of 2023, latest statistics released by the Pakistan Microfinance Network (PMN) show.

The combined figure for the outstanding principal for all outstanding client loans, without interest receivables, increased 3.7 per cent from the preceding quarter to Rs509.6bn at the end of March.

The penetration rate — which shows the share of the relevant population that has used microfinance products at least once in their lifetime — stood at 23.1pc at the end of March versus 22.7pc a quarter ago. This means more than seven in every 10 potential customers in the country still haven’t accessed microfinance.

In the industry-wide gross loan portfolio, microfinance banks had a share of Rs394bn or about 77pc while the rest was held by non-banking microfinance companies (NBMFCs).

The number of active microfinance borrowers crossed 9.2 million, up 1.8pc from the preceding quarter. According to PMN analyst Abdullah Saeed, a similar trend was observed in the women clientele that rose 2pc over the same period. Microfinance banks had 6.1m active borrowers while NBMFCs catered to 3.2m borrowers.

The disbursement of microfinance loans, which represents fresh credit extended in the three-month period, decreased 18.8pc on a quarterly basis to Rs136.1bn in January-March. The number of loans disbursed in the period under review also dropped 6.1pc to 6.5m.

Early delinquencies — borrowers missing loan payments — decreased from 5.6pc to 5.3pc over the quarter under review as loan repayments resumed with the gradual subsiding of the flood crisis.

In terms of the market share and lending portfolios, HBL Microfinance Bank took over the lead role with an 18.1pc share and a gross loan portfolio of Rs92.2bn at the end of January-March. It was closely followed by Khushhali Bank, which held a market share of 17.5pc and a gross loan portfolio of Rs89.1bn.

In terms of active borrowers, Mobilink Microfinance Bank led with a market share of 27.9pc and a borrower base of 2.6m. A distant second was the National Rural Support Programme with a market share of 7.8pc and a borrower base of 0.72m.

The savers’ base increased 4.4pc to 98.1m at the end of the quarter under review. Telenor Microfinance Bank led this growth by adding 2.5m depositors to its savers’ portfolio. Mobilink Micro­finance Bank and Telenor Microfinance Bank continued their dominance with a total of 81.1m active savers.

The value of savings, however, depicted a drop of 5.2pc quarter-on-quarter to Rs487.5bn at the end of March. “The withdrawal by institutional investors and maturity of TDRs led to a decline in the deposit value,” said Mr Saeed while referring to troubled debt restructurings, an accounting mechanism used by a lender to modify an existing debt agreement with a borrower.

Published in Dawn, May 21st, 2023