Liquidity, NBFC crises roil micro-credit lending

MUMBAI: The liquidity crisis at NBFCs triggered by the bankruptcy of IL&FS and the Supreme Court verdict banning use of the Aadhaar data for financial transactions have led to a 15 per cent drop in microlending by financial institutions for the December 2018 quarter. Disbursements stood at Rs 41,840 crore for the third quarter of the fiscal year, down from Rs 49,450 crore in the preceding three months, data from the credit information company Crif High Mark showed. "There were two major changes during the quarter which may have resulted in the decline. First was the liquidity trouble, which subsided towards the end of the quarter, and the second was the Aadhaar verdict," its VP Parijat Garg said. Garg said the Aadhaar verdict, which prohibits all financial institutions including NBFCs from storing users’ data, resulted in a fall in disbursements and also in a fall in the share of NBFC-MFI lenders in the microloans to 34.79 per cent in the December quarter as against 35.32 per cent in the March 2018 quarter.