With the Reserve Bank of India extending moratorium on payment till August 31, concerns arise among microfinance lenders since they were looking forward to revive cash flow at the soonest by boosting repayment. The extended moratorium may increase stress and interfere with the conventional credit discipline that have been followed for years. Industry body Sa-Dhan says that only about 15 percent borrowers have been willing to make repayment till the third week of May and nevertheless repayment rates were down to around 12 percent till April end.
In light of the challenges faced in rural areas, CreditAccess Grameen, India’s largest microfinance company has agreed to give moratorium only to those who are genuinely facing difficulties in making repayments. For the rest, the company has planned to start disbursement and collections from June 1. With the moratorium extension, asset-liability management and efficiency in repayment collection even for non-bank lenders seem to be posing a challenge.
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Since moratorium itself comes with a cost, lenders are discouraging customers from taking it. “People are realising that moratorium has a strong cost associated with it, and we, therefore, are seeing upward of 20 percent collection through our customers visiting branches or digital modes recently,” Joby CO, CEO of Dvara KGFS said.
Fortunately, no state has disallowed opening of the MFI offices in green zones and therefore employees have been able to join and make contacts with their clients. Nevertheless, with the recent measures the government has proposed for the NBFC-MFI sector, industry leaders are expectant of the future outlook of the sector.
In fact, Satya MicroCapital and Sindhuja Microcredit have recently raised over Rs 170 crore from foreign investors. The former has raised around Rs 105 crore from Japan-based Gojo and Company while the other was able to raise funds of Rs 65 crores from Norway-based Nordic Microfinance Initiative and Mumbai-based Carpediem Capital.