How millions of defaults threaten the future of microfinance in India
How millions of defaults threaten the future of microfinance in India
With India’s economy set to contract the most since 1952, many borrowers most of whom are small traders & daily wage labourers are becoming trapped in never-ending debt cycles. Text Size:
A+
Mumbai/New Delhi: In February 2020, unaware the coronavirus pandemic was about to wipe out her livelihood, Arpita Das borrowed $2,300 to buy materials and equipment for her family fishing business in West Bengal, India. A few weeks later, demand for her prawns collapsed, leaving her unable to make the $180 monthly repayments to two microlenders.
Millions of Defaults Threaten Microfinance s Future in India
Suvashree Ghosh and Shruti Srivastava, Bloomberg News People at the Lajpat Nagar market in New Delhi. Photographer: Prashanth Vishwanathan/Bloomberg , Bloomberg
(Bloomberg Markets) In February 2020, unaware the coronavirus pandemic was about to wipe out her livelihood, Arpita Das borrowed $2,300 to buy materials and equipment for her family fishing business in West Bengal, India. A few weeks later, demand for her prawns collapsed, leaving her unable to make the $180 monthly repayments to two microlenders.
The 33-year-old mother of two, whoâd never missed a payment since she started borrowing three years earlier, is now living off the vegetables and grains she grows on a plot of land outside the home she shares with her husband and his parents. With the whole family out of work, theyâre unlikely to have any income unless she can borrow $1,400 for this
Feb 4, 2021
In February 2020, unaware the coronavirus pandemic was about to wipe out her livelihood, Arpita Das borrowed $2,300 to buy materials and equipment for her family fishing business in West Bengal, India. A few weeks later, demand for her prawns collapsed, leaving her unable to make the $180 monthly repayments to two microlenders.
The 33-year-old mother of two, who had never missed a payment since she started borrowing three years earlier, is now living off the vegetables and grains she grows on a plot of land outside the home she shares with her husband and his parents. With the whole family out of work, they are unlikely to have any income unless she can borrow $1,400 for this year’s prawn harvest.
Assam MFI Bill may hit collections in short term
January 07, 2021
Sector roiled by pandemic and natural calamities may face a repayment crisis
The Assam Micro Finance Institutions (Regulation of Money Lending) Bill 2020, which was recently passed by the Assam Assembly, is likely to create “some confusion” in the minds of borrowers and could affect collections in the region in the short term.
While the Bill is still not available in public domain, however, certain reports indicate that the key provisions of the Bill would include restriction on the deployment of collection agents, coercive collection practices and door-to-door collection; cap on the number of lenders per borrower as well as on the overall loan outstanding; and a minimum three-month loan repayment moratorium in case of natural adverse events.
Despite heavy headwinds, the macro picture looks promising
December 23, 2020
While the demand for credit is still there, disbursements are lower because of the increased focus on recovery, collections - Getty Images/iStockphoto
While the demand for credit is still there, disbursements are lower because of the increased focus on recovery, collections - Getty Images/iStockphoto×
Players, who were hobbled by multiple challenges through the year, are now buoyed by improving collections
The microfinance industry, which had seen its collection efficiency drop to as low as one per cent in April this year following the lockdown in the wake of Covid-19 pandemic, is crawling back to normalcy, albeit a bit slowly.