Micro lenders' woes over NBFC liquidity
Top executives said that the Microlenders that depend for funding from NBFCs, mainly the smaller ones, will slow the disbursements in October. Monthly disbursements have decreased to 30-50%.
It is said by the Udaya Kumar that “The risk is that sectoral growth may be slow for a couple months before everything stabilizes. Mr. Uday Kumar is president of the Microfinance Institutions Network (MFIN), the sector's lobby group.
Next month a MFIN delegation will meet NBFC next week to provide funds for the smaller microlenders. But this fund will be relased to the microlenders that typically borrow 50-60% of their working capital.
It is also said by the Kumar that “We have raised our concerns with Reserve Bank of India,” he is also the managing director of Bangalore-based Credit Access Grameen. This was listed on August 23, this year. He said that “We would also like to sensitize the NBFCs that they should not stop releasing funds to NBFC-MFIs (microfinance institutions) as we belong to the low-risk category in terms of asset-liability mismatch. We are also trying to encourage our members to do more securitisation deals to pass through this situation.”
Furthermore some microfinance firms are trying to adjust the fund flow by borrowing the funds at a higher rateof interest.
Kartick Biswas said that “About 40% of our funding comes from about four NBFCs and the flow has largely ebbed,” he is the managing director of Kolkata-based Uttrayan Financial Services, this institution has a loan portfolio of about Rs 200 crore. “We had to borrow at 50 basis points higher rate from one of them while others stopped releasing funds.” A basis point is 0.01 percentage point.
it is expected that the situation will stiblise in next 4 to 6 weeks.