According to Microfinance Institutions Network (MFIN) CEO Alok Misra, the microfinance sector is unlikely to face significant challenges from the second wave of COVID-19 and is well prepared to face any disruption.
Microfinance institutions (MFIs) have simplified their processes, trained field staff on COVID-appropriate actions and coping with lockdowns, and concentrated on digitisation in the last year, and these measures would help them manage any kind of situation, he added.
“The preparations, involvement of seniors on the field, and digital content ensured over the past year that (MFI) is much better prepared than the year last year,” says Misra.
There will be local level lockdowns before the pandemic is over, causing medium to minor disturbances to livelihoods, but the industry has learned to live with it, he said.
“I can’t say it was usual in the pre-COVID days. There would be some effects, but it would be minor and would not be crippling to the industry,” Misra added.
MFIN is a self-regulatory organisation (SRO) for the microfinance industry that is approved by the RBI. Its members include 58 NBFC-MFIs and 39 affiliates, which include banks, small finance banks (SFBs), and NBFCs.
According to Misra, the MFI industry is using creative methods to reach out to customers, maintain connections, and thrive.
In a recent study, rating agency Icra Ratings stated that the overall long-term growth outlook for the domestic microfinance industry, including microfinance institutions (MFI) and micro finance-focused small finance banks (SFB), remains strong, despite the COVID-19-induced disruptions.
Nonetheless, improving collection performance, on-balance-sheet liquidity, and capitalisation should help most organisations weather the storm,” the agency added.
Every quarter, MFIN publishes MFI performance data. The fourth-quarter results have yet to be published. FIMisra reported that the sector disbursed about Rs 60,000 crore in the third quarter of FY21, which was close to the corresponding quarter of FY20.
MFI collection performance was close to 92 per cent in the fourth quarter, he said.