Microfinance credit served by non-banking financial companies (NBFCs) is typically about looking at the bottom of the pyramid, Satin Creditcare Networks Ltd CMD H P Singh said.
The Reserve Bank has a major role to play. Small-time people talk about loan waiver, not paying instalments etc. But NBFCs are organised financial institutions regulated by RBI, he said.
"I think a lot of people who are unorganised are working in these (micro lending) areas, like chit funds. So, why are we clubbed with them?," he asked.
Often, it also happens that borrowers refuse to repay loans upon hearing about loan waiver schemes without understanding that NBFCs are not government owned but merely RBI regulated.
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Asked about the impact on business post-demonetisation, Singh said that a majority of people applying for micro credit are from the unorganised sector and there was an impact on their livelihood which did hit borrowers' repayment capacity.
"When cash goes out of the system, definitely it will affect to a certain extent. The interim collection efficiencies had gone down," Singh said.
Satin Creditcare also sees a bottomline hit in 2016-17 from loan write-offs because of delegalisation of old Rs 500 and Rs 1,000 notes.
"Whatever will be the write-off due to demonetisation, it will impact our bottomline. It will be after April that we will be able to assesses how much we have technically written off. It will not be very significant though," he added.