Mi­cro-credit col­lec­tions in East, N-E lag­ging na­tional av­er­age

Dou­ble whammy of Covid-19 and nat­u­ral calami­ties af­fect­ing re­pay­ments

The Hindu Business Line - - FRONT PAGE - SHOBHA ROY

Kolkata, Oc­to­ber 16

Re­pay­ments by mi­cro­cre­dit bor­row­ers in the eastern and north-eastern re­gions, hit by a dou­ble whammy of the Covid pan­demic and nat­u­ral calami­ties, are cur­rently lower than the na­tional av­er­age.

Ac­cord­ing to avail­able es­ti­mates, the col­lec­tion ef­fi­ciency in the eastern and north-eastern re­gion is lower by 5-6 per­cent­age points com­pared to the na­tional av­er­age.

“Af­ter the end of the mora­to­rium (in Au­gust), the per­for­mance (of this re­gion) has been en­cour­ag­ing, but due to sev­eral rea­sons it is not at par with some of the other well-per­form­ing States. There are also some lo­cal-level dis­tur­bances (which are im­pact­ing col­lec­tions). Septem­ber was the first month af­ter mora­to­rium, so we still don’t have the data ready. But based on what we are hear­ing from in­sti­tu­tions, it is cur­rently lower by about 5-6 per­cent­age points,” Alok Misra, CEO, Mi­cro­fi­nance In­sti­tu­tions Net­work (MFIN), told Busi­nessLine.

The over­all col­lec­tion ef­fi­ciency in the mi­cro­fi­nance sec­tor has im­proved to around 85 per cent as of Septem­ber-end, up from around 75-80 per cent in Au­gust. How­ever, col­lec­tions in the East and North-East still hover at around 78-80 per cent. While Cy­clone Am­phan swept West Ben­gal and parts of Odisha, Bi­har and As­sam were af­fected by tor­ren­tial rain and floods.

It is to be noted that East and North-East to­gether ac­count for nearly one-third of the to­tal NBFC-MFI port­fo­lio, which was ₹72,170 crore as on June 30. The re­gion ac­counts for 34 per cent of the to­tal mi­cro­fi­nance book, fol­lowed by South (25 per cent), North (15 per cent), West (15 per cent) and Cen­tral In­dia (11 per cent), as per MFIN data.

In­crease in NPAs

The MFI in­dus­try, which has been used to 98-99 per cent col­lec­tion ef­fi­ciency, could wit­ness a spike in NPAs if col­lec­tions do not im­prove.

The cur­rent quar­ter would be “very crit­i­cal” and the fo­cus of most com­pa­nies would be to get the ac­counts ac­ti­vated by ask­ing cus­tomers to pay at least a por­tion of their in­stal­ment, said Manoj Kumar Nam­biar, Man­ag­ing Di­rec­tor, Aro­han Fi­nan­cial Ser­vices Ltd.

How­ever, Chan­dra Shekhar Ghosh, Man­ag­ing Di­rec­tor & CEO, Band­han Bank, feels the re­gion may come back to nor­mal by the end of this quar­ter and col­lec­tions would be at par with the na­tional av­er­age.

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