Micro Finance Sector - On A Tightrope Walk: Prabhudas Lilladher
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Prabhudas Lilladher Report
Our channel checks indicate multiple challenges for micro finance institutions in the nature of strained collections (efficiency at 60-70% in May/June 2021), operational bottlenecks, elevated early bucket delinquencies (30-60 days past due portfolio-at-risk ~ double digits) and need for higher provisioning (3-6% credit costs for FY22 as in FY21).
While Assam loan relief and Reserve Bank of India consultation paper on harmonisation of lending practices could bring respite in medium term, MFIs’ business models are expected to undergo structural changes ahead.
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