Demonetisation to dent MFI profitability: Report

Collection dived to 75-80% in November-December from 99% after demonetisation

With demonetisation taking a toll on recoveries during November and December, micro finance institutions (MFIs) might report a substantial dip in profit for 2017-18.

The rise in credit and operating costs are expected to bring down return on equity from 13-15 per cent to below 10 per cent for FY18, according to rating agency ICRA.

Collection dived to 75-80 per cent in November-December, from 99 per cent prior to demonetisation of Rs 500 and Rs 1,000 currency notes on November 8.

The Rs 55,000 crore sector (MFIS and non-bank finance companies) had displayed strong asset quality till recently,