Analysis: India’s Microfinance Sector Hit As Defaults Surge In Pandemic
Small loan specialists in India that typically cater to people without bank accounts are facing a jump in pandemic-related defaults that could force some of them out of business, industry experts warn.
Small loan specialists in India that typically cater to people without bank accounts are facing a jump in pandemic-related defaults that could force some of them out of business, industry experts warn.
Loans overdue by 30 days are expected to reach 14-16per cent of all so-called microfinance loans in the immediate aftermath of the second COVID-19 wave sweeping India, said Krishnan Sitaraman, senior director at credit rating agency CRISIL.
That’s higher than 6-7per cent in March, before the second wave took hold, and also above the 11.7per cent reached in March 2017 after India’s demonetisation drive – an attempt to boost digital transactions and crack down on undeclared money that also hit microfinance lenders hard.
Photo courtesy of Shubhangee Vyas.
Source: Channel News Asia (link opens in a new window)
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