NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Friday, January 19, 2018

The microfinance sector may be in the last leg of the demonetisation-led sufferings and looks to grow double digit next quarter, captains of the industry said.

The microfinance companies, which had collectively written off about Rs 5,000 crore of loans in the first two quarters, are expecting sizeable recovery from these accounts, said Ratna Vishwanathan, former chief executive at Microfinance Institutions Network, the self-regulator for the sector. But it would be difficult to put a number at this point.

Loan repayment took a severe hit in the cash-based sector after the government announced note-ban in November 2016. The situation deteriorated further when small borrowers in five states including Uttar Pradesh and Maharashtra stopped repaying loans after the respective governments announced farm loan waiver.

The Vidarbha region in the eastern part of Maharashtra alone accounted for 35% of the loan write-offs.

Photo courtesy of Peter Haden.