I think loan assets is not the right way to look at MFIs. Banks lending to retail/corporate have loan tenure in years (5 years to 20 years) and hence runoff rate is low and asset size tends to grow. In MFI, average loan duration is in months (12 tp 24 months, average 14 months) and hence large runoff rate. e.g. Arman will have loan disbursements of 400Cr this year but AUM might be at 300Cr. I think RoA is probably right metric to look at MFI with higher tolerance for PAR (Portfolio at risk). NPA concept of 90 days of non-repayment is also not fully applicable as payment collection frequency in MFI is daily/weekly. Also MFI tend to come out of stress in AUM much faster compared to Banks simply because of smaller loan duration. e.g. Arman reported losses in Namra for 2 quarters post DeMo and they were in the positive in Q1 FY18 and ready to grow again.
Also there is a limit of 12% interest spread as per RBI regulation once AUM crosses 100Cr mark. The operational costs (branches, field workforce, daily collection) of MFI tend to be very high at 8-10% and hence funding cost + 12% is best MFI customers can hope to get.
Best Regards,
Rupesh