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Coronavirus crisis: MFIs hope loan repayments to begin from June

Rating agency ICRA said that nearly 50 per cent of the entire MFI portfolio is in the orange and green zones

twitter-logo PTI        Last Updated: May 15, 2020  | 13:05 IST
Coronavirus crisis: MFIs hope loan repayments to begin from June

The micro-finance institutions (MFIs), which have been hit severely in the wake of the coronavirus-triggered lockdown, are expecting that the repayments of loans given to the borrowers will actually start from June, an official of the industry body said on Friday. Most employees of micro lenders have come back to their offices in green zones and have been able to establish contacts with their clients, either over phone or visiting them physically, Microfinance Institutions Network (MFIN) CEO Harsh Shrivastava said.

"No state is disallowing opening of the MFI offices in green zones. The MFI portfolio is spread across the country and a substantial portion of that is in the green zones," Shrivastava told PTI. Since May 4, the begining of the third phase of the lockdown, employees of micro lenders have joined their offices in green zones, though collections and disbursements have not been started, he said.

The outlook of the industry is good after the government had announced few measures to prop up the NBFC-MFI sector, he said. "In the rural areas, the clients have incomes and businesses are taking place. But collections are not happening due to the moratorium on repayment, which will end on May 31, 2020," he said.

However, he said emergency loans can be given to existing clients with good track record. The government had announced a special liquidity support of Rs 30,000 crore with its guarantee, and the Rs 45,000 crore partial credit guarantee scheme will help the MFIs, he said, adding that it will instil confidence among the lenders.

P Satish, executive director of Sa-dhan, a self- regulatory organisation of the MFIs, said that two per cent interest subvention on "Mudra Sishu" loans, announced by the government, will help the microI borrowers. Nearly 70 per cent of these loans have been lent to the MFI sector, he said. Rating agency ICRA said that nearly 50 per cent of the entire MFI portfolio is in the orange and green zones.

Also read: Coronavirus live updates: Tamil Nadu pips Gujarat; becomes 2nd worst-hit state with COVID-19 cases at 9,674

Also read: Sans cash transfers, COVID-19 package provides little stimulus to economy

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