MFIs are institutions that borrow from banks and lend to small borrowers at a margin. The COVID lockdown had severely impacted the operations of these institutions as collection process took a hit.
Data from Microfinance Institutions Network (MFIN), an industry lobby of microlenders, shows disbursements plummeted during the COVID lockdown period. The body, however, expects the business of MFIs to inch back to pre-COVID times by the year-end.
According to the data, during Q1FY21, NBFC-MFIs that are members of MFIN disbursed 2.04 lakh loans amounting to Rs 570 crore, as compared to 59 lakh loans disbursed amounting to Rs 15,865 crores in Q1FY20, a year-on-year drop of 97 per cent in the number of loans and 96 percent in the amount disbursed.
Of this, top 10 MFIs in terms of loan amount disbursed accounted for 96 percent of NBFC-MFI industry disbursements in Q1FY21, the data showed. MFIs are institutions that borrow from banks and lend to small borrowers at a margin. The COVID lockdown had severely impacted the operations of these institutions as the collection process took a hit.
On the other hand, banks' reluctance to lend to smaller MFIs too added to their woes. Bigger MFIs, however, continued to get funding. During Q1FY21, NBFC-MFIs received a total of Rs 5,973 crore in debt funding, almost equal to Q1FY20 and 52 percent lower than Q4FY20 at Rs 12,448 crores, MFIN said. As on June 30, 2020, NBFC-MFIs collectively had a network of 14,167 branches with 1,09,239 employees.