MFI Sector Update - Collections Revived Sharply In July, But Not Completely Out Of The Woods: ICICI Securities
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ICICI Securities Report
Microfinance sector, while going through one of the most prolonged and uncertain asset quality cycles since 2010, continued to surprise the street with sharp improvement in July 2021 collections.
Resurgence of Covid-19 in mid-April 2021 and subsequent lockdowns and restrictions derailed the improving collections trend in MFI space.
While we note that Covid-19 spread was higher in rural and semiurban region during second wave, lockdowns were limited to impacted districts which helped reviving economic activities much quicker (within two months versus four to five months in first wave).
As a result, collections reached 90% plus by July-21, within two months from lows versus five to seven months it took to reach 90% in first wave.
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