Stress in the microfinance sector has soared with approximately 70 per cent of borrowers. The sector was seeking moratorium on loan repayments as their income fell and savings eroded. Micro lenders engaged in roadside sale, tailoring and weaving in urban and semi-urban pockets face the strain more. It caused of their daily earnings disappeared during the lockdown. Meanwhile, with good rabi crop harvest, people engaged in farming and allied activities are better off.
Just about 30 per cent of the micro loan borrowers had sought the moratorium. Then, the Reserve Bank of India approved it. The due time was until the first week of April. One month down the track, according to data collected by microfinance industry associations the ratio jumped to approximately 70-75 per cent. RBI announced on March 27th a moratorium on payment to help stressed borrowers hit by the Covid-19 pandemic.
“We now see nearly two-thirds seeking it from a small one-third seeking moratorium in early April. Manoj Nambiar, chairman of the sector’s Microfinance Institutions Network (MFIN), a self-regulator, told about it. “It clearly shows household savings depletion in the last six weeks of lockdown.”
Borrowers Want Moratorium
Dibyajyoti Pattanaik, managing director of Annapurna Finance, an Odisha-based micro lender, said about the number of borrowers. They were seeking moratorium is increasing by the day as they want to hold back whatever liquidity they have with no or less cash flow.
The lenders at the bottom of the pyramid are still searching for a fresh dose of loans to restart their companies.
“The activities that are important in nature will pick them up so that people involved in these activities need more cash, too,” Pattanaik said.
Sa-Dhan, an industry group, gave his response. He projected that MFIs will have to lend nearly Rs 50,000 crore over the next six months, mostly via emergency or additional loans, as borrowers need new credit lines to restore their lives and stabilize their profits.
