Pain due to demonetisation, political compulsions: Bharat Fin

Prashant: What is going on ground in Maharashtra and Uttar Pradesh because those are the two states which are the most under focus as far as your business is concerned. What is happening on the ground?

A: I will talk of the sector because company specifics, it will be appropriate if the MD talks, but I would say that we have put our figures in public domain four days. They are not bad for two-three reasons; we are the lowest cost microfinance institution in the country, we are probably the only sub-20 percent lender in the rural microfinance institution. Second, disbursements are affected because traditionally all disbursements used to be through cash and non availability of cash has indeed affected disbursements. However, there is some impact in these two states but the impact varies from microfinance institution to microfinance institution based in their local strength. A slightly larger MFI probably has a better recovery because people see it as a larger organisation and continued organisation. However, the smaller MFIs are likely to have a great impact.    

I would say the Maharashtra impact is in the last portion. Uttar Pradesh, some time is to be allowed.Ekta: Can you detail for us how much have collections reduced in Maharashtra and UP for the industry and for Bharat Financial?

A: The collections on a whole -- the larger an organisation the larger is the monthly or weekly repayment. All MFIs are trying to redeploy recoveries for lending because fresh cash in not available. So for somebody like us, if I say our monthly disbursements were about Rs 1,500 crore, today these are about 50-60 percent. We have already put in public domain that between November 8, when the demonetisation was announced, till the date of December 15, I would say that we have done just under Rs 1,000 crore of disbursement from recovery. Therefore, I would say we may not be representative of the industry that is a something which has to be separately analysed. The others could have been more impacted if the monthly collections and recoveries were of lower order.Prashant: From November 8 to December 15, Rs 1,000 crore disbursement only via collections? A: Only via collections and this is pan India.

Prashant: Would that be the only disbursement?

A: Maharashtra and UP have about 20 percent share, so around that figure would be for Maharashtra and UP, maybe lower but not higher.

Prashant: When you say only through disbursement, cash otherwise is not available.

A: Till about 10-12 days back one was not able to draw cash beyond Rs 50,000. The relaxation has happened but banks have not implemented because banks do not have cash.

Prashant: One clarification, in your first answer you said UP falls in the latter category and Maharashtra in the former. Could you clarify?

A: In Maharashtra the third phase of local election is on and we believe that the pain is twofold; one arising out of impact of demonetisation and other political compulsions arising out of the local elections. So the political compulsion impact arising out of local elections in Maharashtra is nearing end.     

For entire interview, watch accompanying video...