CreditAccess Grameen Limited (CAGL) has released its Interim Business Update for February 2025, outlining positive developments in business momentum and stabilizing asset quality. Despite facing some regional challenges, particularly in Karnataka, the company has managed to sustain robust loan growth and improve collections across its operating areas.

Business Momentum and Loan Growth
CAGL’s loan portfolio continues to show a healthy expansion, with over 1.5 lakh new borrowers added in January and February 2025, contributing to a growth in Gross Loan Portfolio (GLP), which reached INR 25,395 crore by the end of February 2025, up from INR 24,810 crore in December 2024. While growth was strong in most states, Karnataka exhibited slower growth, with a small increase from INR 7,927 crore in December to INR 8,010 crore in February.

The overall loan portfolio growth was supported by steady advances in various states, particularly Maharashtra, Tamil Nadu, and Bihar, despite the temporary disruptions caused by external factors such as heavy rains and cyclones in Tamil Nadu during the fourth quarter of 2024.

Asset Quality and Collection Efficiency
A key highlight of the update was the stabilization in asset quality, with a declining PAR (Portfolio at Risk) accretion rate across most states, especially excluding Karnataka. As of February 2025, the PAR 0+ stood at 7.5%, up slightly from 6.8% in December 2024, but largely driven by increased delinquencies in Karnataka. In contrast, PAR 0+ excluding Karnataka improved from 8.0% in December to 7.3% in February.

The collection efficiency also showed significant improvement, with a >99.5% efficiency outside of Karnataka by the end of February 2025. However, in Karnataka, collection efficiency dropped slightly to 95.1% in early February before recovering to 98.0% by the end of the month. This decline in Karnataka’s performance was attributed to the impact of the Karnataka Ordinance that limited collections to centre meetings and reduced field activities. Following the release of the ordinance, which clarified that it applied only to unlicensed lenders and did not affect RBI-regulated entities, collection efforts resumed with greater intensity, helping to improve the PAR trends in the state.

Impact of Karnataka Ordinance
The Karnataka Ordinance, enacted in February 2025, had a transient impact on CAGL’s loan portfolio, especially in terms of delinquencies. As anticipated, the ordinance led to operational ambiguities in the early part of January and February 2025, which resulted in temporary delays in loan repayments. While many borrowers continued to make payments during centre meetings, some delayed their repayments due to the restrictions. However, the company quickly adapted to the changes and resumed regular collection efforts beyond centre meetings in line with RBI regulations.

Despite the initial spike in PAR accretion, the company has reported a gradual reduction in weekly PAR additions post-ordinance, signaling a positive trend towards asset quality stabilization. The impact of the ordinance is expected to normalize within the next 1-2 months as awareness drives and consistent borrower communication help bring delinquencies under control.

Employee Growth and Operational Efforts
CAGL also reported an increase in its employee base, which grew from 19,333 in December 2024 to 20,265 in February 2025. This increase reflects the company’s commitment to strengthening operational capacity and enhancing its collection efforts. Additionally, despite challenges, the company’s healthy collections from PAR buckets remain promising, with over 40% of borrowers in PAR 1-60 making partial payments.

Conclusion
In summary, CreditAccess Grameen Limited has shown strong business momentum and stability in asset quality as of February 2025. The company’s loan portfolio growth, particularly in the non-Karnataka geographies, continues to be robust, and its proactive efforts to stabilize the Karnataka portfolio are expected to yield results in the coming months. With its strategic focus on improving collection efficiency, maintaining a strong employee base, and adapting to external challenges such as the Karnataka Ordinance, CAGL is well-positioned to achieve sustained growth and profitability in the near future.

The Current active IPO is NAPS Global.

The Closed IPOs is Balaji Phosphates.

Start your Stock Market Journey and Apply in IPO by Opening Free Demat Account in Choice Broking FinX.

Join our Trading with CA Abhay Telegram Channel for regular Stock Market Trading and Investment Calls by CA Abhay Varn - SEBI Registered Research Analyst.

Join our Finance Saathi Telegram Channel for Regular Share Market, News & IPO Update.