₹38.8 trillion. However, microfinance companies, or those classified as NBFC-MFIs and are primarily dependent on bank borrowings for funding, have been undergoing asset quality stress during the pandemic.
Their gross NPA ratio ballooned from 2% of total advances in March 2020 to 4.9% in March 2021 as business dislocation dampened recoveries, RBI said.
That apart, their SMA-2 advances increased from 0.2% to 1.3% of total advances in the same period. Special mention account-0 (SMA- 0) loans are where the repayment overdue is between one day and 30 days, SMA-1 (between 31 and 60 days) and SMA-2 (61-90 days). “Decline in collection efficiency could impact the liquidity position of NBFC-MFIs negatively and have implications for the quality