Friday, 17 February 2017

Note ban hit microfinance loans in Q3 by 26%: MFIN-The Total Investment & Insurance Solutions

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17 February 2017

The Indian microfinance industry recorded a drop of 26% in the number of loans disbursed and a 16% decline in loan amounts disbursed during the third quarter ended December, as compared to the corresponding quarter of the last fiscal, the Microfinance Institutions Network (MFIN) said on Thursday. The Total Investment & Insurance Solutions

"The pulling out of the High-Value Currency Notes (HCVNs) from circulation significantly impacted the microfinance sector, which is 99 per cent cash-driven," MFIN -- the self-regulatory body of the Reserve Bank-regulated non-banking finance companies (NBFCs) and microfinance institutions (MFIs) -- said in a release here.

"The decrease on both disbursement and collection is due to the impact on industry post discontinuance of Rs500 and Rs1,000 notes," it said.

"Post the discontinuation of HCVNs with effect from midnight of 8th November, the industry was thrown out of gear initially," said MFIN Chief Executive Ratna Vishwanathan.

"During the whole two months post discontinuing of High-Value Currency Notes, MFIN has had to engage with state governments, at both the ministerial level as well as the bureaucracy, the RBI and extensively with the press, to quell the surge of disinformation with reference to microfinance practices," she added. The Total Investment & Insurance Solutions

According to the body, loans disbursed during the third quarter ended December amounted to Rs12,424 crore, as compared to Rs14,707 crore disbursed during the same quarter last year.

However, the microfinance industry grew by 53% year-on-year during the quarter in consideration, the statement said. The Total Investment & Insurance Solutions

The aggregate gross loan portfolio of microfinance institutions stood at Rs56,634 crore in the quarter ended December 2016, as compared to Rs36,912 crore in the same quarter of the previous year. The Total Investment & Insurance Solutions


The MFIN also said that 56% of total disbursements during the quarter came from five states -- Karnataka, Tamil Nadu, Maharashtra, Odisha and Bihar.The Total Investment & Insurance Solutions

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