Viewpoint: Microfinance Industry Most Vulnerable to Lockdown and Moratorium in India
By Hamsini Karthik
Stocks in the microfinance (MFI) space whether CreditAccess Grameen, Spandana Spoorthy or Bandhan Bank (with significant MFI exposure) have shed 37 – 59 per cent in the past month. This is despite managements of Bandhan Bank and CreditAccess Grameen repeatedly trying to assuage investors’ concerns on their business outlook and explaining to them why the country-wide lockdown may only be a temporary hit on their financials.
In a recent call with analysts, Bandhan Bank said it has stopped fresh disbursement/collection but has not seen MFI customers dipping into their savings yet. “As a long-term strategy, the bank has already diversified asset portfolio, with the MFI share down to 61 per cent and to fall further to 40 per cent over the years,” analysts at Emkay Global Financial note. “While all weekly centre meetings, disbursements and collections are temporarily stopped due to lockdown, employees are maintaining regular connection with customers via phone calls,” analysts at ICICI Securities note after a call with CreditAccess Grameen’s management.
Photo courtesy of Peter Haden.