Microfinance bounces back with a bang post Demonetisation


Microfinance segment has made an impressive comeback following the demonetisation drive of the Narendra Modi Government which has touched nearly every sector of the Indian economy.

According to a study by the Microfinance Institutions Network (MFIN), the asset quality of the microfinance industry has shown a major improved in the April-June quarter of 2017-18.

While the portfolio at risk was reported to be at 10.8 per cent during the January-March period of 2016-17, the figures declined to 7.46 per cent April-June quarter of 2017-18.

The demonetisation drive that was initiated last year to curb the rampant of corruption and counterfeiting of currency, gave a major jitter to the microfinance industry due to severe cash crunch.

“Portfolio at risk numbers have improved (over the previous quarter), which shows that the NBFC-MFI business is slowly returning to normalcy. However, we will have to wait for another few quarters as we expect it to come back to the pre-demonetisation level of under 1 per cent. We are optimistic about the industry growth in the coming months,” said Ratna Vishwanathan, CEO of MFIN.

The report further suggested that the number of client’s of NBFC-MFIs increased to 19 per cent and reached 2.08 crore at the end of the first quarter of 2017-18. Loan disbursement reported an increase of 21 per cent during the reported quarter.

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