Global Statistics

All countries
235,417,004
Confirmed
Updated on 03/10/2021 2:22 am
All countries
210,505,872
Recovered
Updated on 03/10/2021 2:22 am
All countries
4,811,563
Deaths
Updated on 03/10/2021 2:22 am

Global Statistics

All countries
235,417,004
Confirmed
Updated on 03/10/2021 2:22 am
All countries
210,505,872
Recovered
Updated on 03/10/2021 2:22 am
All countries
4,811,563
Deaths
Updated on 03/10/2021 2:22 am

Microfinance Institutions (MFIs), Smaller NBFC Collections Fall to 65-85% in First Quarter of Fiscal Year 22: Acuite Ratings

National credit rating agency Acuite Ratings said on Thursday that the collection efficiency of its rated microfinance institutions (MFIs) and smaller non-bank finance companies (NBFCs) has dropped to 65-85 percent during the first quarter of the year. fiscal 2022.

The impact of the second wave of Covid-19 has been more pronounced in collections in the microfinance asset classes and loans for two-wheelers compared to the first cycle, the agency said in a report.

Watch Zee Business Live TV broadcast below:

“Analysis of Acuit-rated Smaller MFIs and NBFCs? Indicates that collection efficiencies that recovered above 90 percent in March 2021 have fallen to levels between 65 and 85 percent during the year. first quarter of fiscal year 22, “he said.

The sector has returned with a marked improvement in disbursements and collection efficiency levels since the third quarter of 2021.

However, with the second wave of Covid-19 forcing many states to impose strict lockdowns, the sectoral recovery came to a halt and led to a perceptible deterioration in credit quality, according to the report.

The agency’s chief analytical officer, Suman Chowdhary, said that given the intermittent nature of economic activities in the wake of the Covid spread in the first quarter of fiscal 22, the sources of income for borrowers, particularly those receiving services from Smaller NBFC / MFIs have been severely affected.

This has exacerbated asset quality stress for these lenders, he said.

“While there has been some improvement in collection efficiency levels during the month of June 2021, delinquencies will increase during the first quarter of fiscal year 21. For smaller MFIs, the figures of 90 dpd (days late) are in the 4.5-5 percent range as of June 2021 ,? Chowdhary said.

The report said that in addition to lower fees, the debt collection capacity of these smaller players has been affected and an estimated 50 percent of players (who have a loan portfolio of more than Rs 500 crore) ) have received adequate funding.

Limits in raising equity and debt, coupled with a sharp drop in securitization volumes due to increased concerns about bad debts, have led to a liquidity squeeze for smaller players.

The agency said that ten of the 13 issuer downgrades by credit rating agencies during the first quarter of fiscal 22 in the financial sector are smaller MFIs and NBFCs dedicated to providing unsecured loans for MSMEs, personal loans and for vehicles.

Among the ten downgraded entities in the sector, six have been placed in the non-investment category and of that, three have witnessed a default.

Chowdhury further said that the overall outlook for the MFI and small NBFC sector will improve with the gradual normalization of the economy over the next few quarters and he expects to see a recovery in disbursement growth in H2FY22.

“However, some of the smaller players with low capital raising capacity, higher leverage and low liquidity buffers may continue to face credit challenges in the short term,” Chowdhury added.

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Hot Topics

Related Articles