MFI loans that are overdue beyond 30 days to cross demonetisation peak, reach 14-16%: CRISIL

MFI loans that are overdue beyond 30 days will cross demonetisation peak and reach 14-16%, CRISIL said

A hit to collection efficiency of microfinance institutions (NBFC-MFIs) owing to protracted COVID-19 curbs will increase asset-quality pressures in the sector, rating agency CRISIL said on June 10. Loans in arrears for over 30 days could rise to 14-16 percent of portfolio in June from a recent low of 6-7 percent in March, the agency said .

The number had surged to 11.7 percent in March 2017, in the aftermath of demonetisation, said CRISIL.

But, unlike last fiscal, when loan moratorium helped keep delinquency increases at bay, more MFIs are likely to opt for permitting restructuring under the Reserve Bank of India (RBI)’s Resolution Framework 2.0 announced last month, and continue with higher provisioning, CRISIL said.

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