COVID 2.0 to impact MFIs; delinquencies likely to rise in June: Acuite Ratings

PTIUpdated: Monday, May 10, 2021, 03:07 PM IST
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Impact of the second wave is also in the hinterland, sparking a crisis in healthcare infrastructure : Acuite Ratings | Pexels

Delinquencies of microfinance institutions (MFI) are likely to increase by June amid the severe COVID crisis, according to Acuite Ratings & Research.

"Acuite expects 30 day delinquencies to increase at least by 30 percent by June 2021 even if the pandemic intensity starts to taper down from the middle of May and may more than double if there is no taper down of the pandemic intensity and the local lockdowns continue till end of Q1FY22," said a report.

It noted that the impact of the second wave has not only been in the large cities but also in the hinterland, sparking a crisis in healthcare infrastructure. While no national level lockdown has been contemplated yet as in last year, the virulence of the second wave has led to lockdowns at local levels in various states and the intensity of such lockdowns may increase if the case load continues to increase further.

This has already started to impact the improving trend in collections and disbursements particularly from the second half of April 2021.

Given the wider coverage of the virus across semi urban and rural areas in this cycle, the risks of a sharper impact on the lives and livelihoods of the micro-finance borrower is higher in the near-term, it said.

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