CreditAccess Grameen Limited

Strong market position in the Indian microfinance sector with long track record

• With a 3 year CAGR of 32.4% through fiscal 2022, itremains to be the largest standalone microfinance institution in the country
• Has been able to scale the business at a robust rate in terms of size as well as operational presence, and all this while maintaining the operational parameters and infrastructure at comfortable levels. 

Sound ground level practices

• Risk management practices have remained sound and evolved over the years – to suit the increasing scale of business.
• 90% of the field employees are hired as freshers and, from neighbouring livelihoods so as to have a strong connect with the borrowers.
• Over 90% of which are in cashless mode and most of the collections happen weekly which result in small EMIs. 

Stable operating profitability with gradually correcting credit costs

• Sustained its operating profitability across business cycles, anchored by lower than industry average operating expenses.
• The company’s pre-provisioning profitability has remained above 5% for the last six fiscals. Even in the aftermath of demonetisation while credit losses rose to 3.5%, its RoMA still remained far better than most micro financers at 2.4% for fiscal 2017. 

High regional concentration in operations

• Regional concentration in loan portfolio remains high – with top 3 states accounting for almost 77.9% (consolidated) of the AUM as on June 30, 2022.
• From 70% in March 2015, the share of Karnataka, which is the largest state in terms of concentration – reduced to 51.5% of the loan book - by the end of March 2019.
• As of June 30, 2022, networth coverage on AUM exposure to top 10 districts was almost 0.8 times and the highest exposure to AUM for any single district was 3%.

Inherently modest credit profile of the borrowers

• A significant portion of the portfolio comprises microfinance loans to clients with below-average credit risk profiles and lack of access to formal credit. Typical borrowers are cattle owners, vegetable vendors, tailors, tea shop owners, provision store owners, and small fabrication units.
• The income flow of these households could be volatile and dependent on the local economy.
• However, since more than 80% of the company’s borrower base is in rural areas wherein the impact of the pandemic and lockdown has been lower, the restoration in their occupational activities has been encouraging.