Credit cost for MFIs to rise to 6-7% in two years as loans remain unpaid

About 12% of customers have not repaid till August end

With about 12 per cent of their customers not having repaid loans till end of August, the credit costs of Micro Finance Institutions (MFIs) could rise to 6-7 per cent over two years from 1.5 per cent in FY20, according to Icra.

The rating agency said 12 per cent of borrowers of 21 entities with collective assets under management (AUM) of around Rs 54,213 crore availed a complete moratorium during April-August 2020.

Consequently, near-term delinquencies (30+ days past due) are expected to increase to double digits. They would remain at these levels for a few months as it will be difficult for