With many states like Tamil Nadu (TN) and Karnataka facing drought situation, there is an acute shortage of drinking water and news of huge crop losses.
The damage due to drought is not felt only by the people but there is news of some collateral damage being felt by the micro-finance industry too (MFI).
However, PH Ravikumar, Non-Executive Chairman, Bharat Financial Inclusion is surprised with this sudden concern for MFIs due to drought because usually, MFIs do not disburse crop loans but largely lend to allied activities.
He said the drought in Karnataka is not new, it was there even before demonetisation. The company in the last two years have not faced any problems in Karnataka due to drought, he added.
There are reports that Karnataka forms around 14 percent of the total MFI market and smaller portion from TN, and now the problem seems to have compounded for the MFIs with farm loan waiver announced in Uttar Pradesh.For full interview, watch video