Microfinance players don’t see hiccup in operations despite fresh Covid restrictions in Maharashtra

Currently, in all regions, collections are happening at joint-liability group (JLG) level with not more than five people. Representative Image

Microfinance players do not foresee any further hiccup in operations, including collection, in Maharashtra despite the state government’s announcement of a slew of Covid-19 restrictions to curb the rapid spread of infections.

Microfinance industry association MFIN believes “in no way” collections will be impacted in Maharashtra due to stringent restrictions imposed by the state government from Monday.

“In no way, collections will be impacted because microfinance has been declared by the government of India as an essential service. Also, under the Covid protocols, microfinance group meetings are now taking place with not more than five people. I don’t see any trouble for microfinance players in Maharashtra,” MFIN CEO and director Alok Misra told FE.

Currently, in all regions, collections are happening at joint-liability group (JLG) level with not more than five people.

According to Misra, on a pan-India basis, the collection efficiency for the microfinance industry has improved to over 90%, except in Assam and some pockets of West Bengal. Some major microfinance players said their collection efficiencies in Maharashtra, the worst Covid impacted state, have remained a bit less than the national average because it continues to report a large number of cases.

“As microlenders have already modified their model for collections, fresh restrictions in Maharashtra will not have any impact. Now, large group meetings are not taking place. Sometimes they are even making doorstep cash collections,” said Chandra Shekhar Ghosh, MD and CEO of Bandhan Bank.

“Fresh set of restrictions like complete weekend lockdowns could impact operations a little bit. But it can be managed,” said Dibyajyoti Pattanaik, director of Bhubaneswar-based MFI Annapurna Finance.

Sa-Dhan, an RBI recognized self-regulatory organization for MFIs, believes that like banks, MFIs will be able to function in Maharashtra. “But it (stringent restrictions) could affect income flows for urban microfinance borrowers. We are having consultations with member MFIs on Tuesday,” executive director P Satish told FE.