Micro Finance Channel Check - Prolonged Pain Hurting Prospects In The MFI Space: Dolat Capital

A man holds a two thousand Indian rupee banknote and a five hundred banknote. (Photographer: Dhiraj Singh/Bloomberg)

Micro Finance Channel Check - Prolonged Pain Hurting Prospects In The MFI Space: Dolat Capital

BQ Blue’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BloombergQuint’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.

Dolat Capital Report

While the micro finance institution industry has seen several risk events in the past, the Covid-19 crisis is both more prolonged and geographically broad based versus previous events.

In FY21, the industry incurred credit costs of ~4.5-5% on account of first wave (excluding of std provision buffers).

However, even after write-offs of 2- 5% of loans in FY21 across most lenders, we are again seeing a case of sharp uptick in portfolio-at-risk 30 plus for industry on account of the second wave.

Our discussions/data also allude that disbursements over the last few quarters were driven by top-up/emergency/supplementary loans which may have aided credit costs for industry.

Click on the attachment to read the full report:

Dolat Capital MFI Channel Checks_22-June-21.pdf


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