has estimated a sequential 8-10% drop in collections in April 2021 and the same may dip further if the second wave cannot be controlled.
Though some states have classified the microfinance industry as an essential activity, the cash flows of borrowers may be affected due to the restrictions / lockdowns, thereby affecting their repayment ability, the rating firm said.
“Consequently, the industry is witnessing a reduction in collections and the recovery seen in Q4 FY2021 is being challenged again,” it said.
The improvement in collection efficiency and pick-up in growth in assets under management in H2 FY2021 helped the industry witness a marginal improvement in the overdue portfolio (0+ days past due (DPD)) to 16.7% as on December 31, 2020, as against 18.1% three months’ earlier.
Among major states with high microfinance penetration, Assam had the highest delinquency rate in terms of the 90+ dpd, which stood at about 20.3% as on December 31, 2020. Other major states namely Maharashtra, West Bengal, and Kerala had 90+ dpd of 7.8%, 6.1% and 6.1% respectively as against the Pan India average of 4.9% in the same period.