Microfinance institutions on a knife-edge with collections taking a big hit

With collections taking a big hit, microfinance institutions will be put through the wringer, reports Raghu Mohan

“The key point is how banks will continue to support us with ample liquidity after the lockdown is over and relative normalcy returns in the rebuilding process,” says Manoj Nambiar, managing director (MD) of Arohan Financial Services, and chairman of the Microfinance Institutions Network (MFIN). He has good reason to be pensive.

In phase-1 of the Covid-19 lockdown, nearly 70 per cent of microfinance institution (MFI) borrowers had not opted for a three-month moratorium on their loans. But the pendulum has moved to the other side now. The universe of the affected, a tad under six million borrowers (mostly women),