Home Mortgage loan MFIs See Demand Rise Soon Due to Emergency Loan Need and Kharif Culture

MFIs See Demand Rise Soon Due to Emergency Loan Need and Kharif Culture

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Microfinance institutions (MFIs) believe the sector will rebound in no time, as they see the demand for microcredit increasing soon due to the urgent loan needs of their clients to restart their businesses.

Microfinance institutions (MFIs) believe the sector will rebound in no time, as they see the demand for microcredit increasing soon due to the urgent loan needs of their clients to restart their businesses. MFIs, which have started to resume operations in the country’s green areas, said kharif cultivation will also regenerate demand.

Cash flow is strained for the sector due to the ongoing foreclosure across the country as MFIs have unanimously decided to offer a moratorium to their clients as permitted RBI, recognizing the impact of the Covid-19 pandemic on the livelihoods of low-income borrowing households. However, MFIs have not yet officially received a moratorium from all of their lenders.

Speaking to FE, Harsh Shrivastava, CEO of industry body MFIN, said some of the member MFIs have resumed operations in green zones and the others will start soon.

“There will be microcredit applications due to clients’ emergency loan needs to restart their businesses. Good clients will also need additional loans to grow their businesses, ”said Shrivastava.

Dibyajyoti Pattanaik, director of Bhubaneswar-based MFI Annapurna Finance, said, “The demand for credit will come because Kharif is here. Customers will need money to grow crops, buy inputs, and pay for labor.

Annapurna Finance plans to start operations in green zones by next week, depending on staff availability. “We encourage our clients to take advantage of the three-month moratorium on payment of loan maturities because the foreclosure impacted their cash flow. But anyone who is willing to pay can do it digitally, ”Pattanaik added.

Annapurna Finance may consider providing the option of supplementing the loan to its existing clients if it sees such a demand.

“In Annapurna, we already have a moratorium for 60% of our banks and our liquidity situation is good. However, for new disbursements to inject money into the rural economy, we would need new disbursements from the banks. We talk to some of them. We don’t have any yet, but there are unused sanctions. In addition, new sanctions are in preparation. We hope to get some, ”he added.

The umbrella organization of microfinance lenders Sa-Dhan has requested a direct loan from the RBI to the NBFC-MFIs. In a videoconference with RBI Governor Shaktikant Das on Monday, Sa-Dhan Executive Director P Satish also requested reasonably priced debt financing from DFIs (Sidbi, Nabard, Mudra) to respond to inquiries. medium and short term liquidity needs of NBFC-MFIs. . “Access to reasonably priced credit by MFIs-NBFCs is important to ensure that clients have affordable credit. Risk-based pricing may not be the right approach right now, ”Satish said.

Echoing Pattanaik, Kuldip Maity, managing director of Kolkata-based Village Financial Services (VFS), said Kharif culture is expected to generate demand for microcredit. Maity further said the microfinance industry will rebound quickly once clients’ business operations resume after the lockdown is fully lifted. “The industry’s rebound won’t take long. I think it will only take a month after the lockdown is lifted. The refinancing activity of Sidbi and Nabard should ease the current cash strains of MFIs, ”he said, adding that VFS had already started operations in many green areas.

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