Micro-finance sector finally recovering from demonetisation shock: Industry

Topics Demonetisation

Photo: Shutterstock
The microfinance industry (MFI) is slowly recovering from the effect of demonetisation which had resulted in substantial write-offs by some of the major players in this sector.

Bandhan Bank, one of the leading players in this sector which transformed into a universal bank from an MFI, said that there had been problems in the collection from the borrowers who had taken loans post demonetisation.

"There had been some problems in the collection of repayments after demonetisation was announced. The problem is gradually tapering off but we did not have make any substantial write-offs", Bandhan Bank managing director Chandra Sekhar Ghosh told reporters at the MFI summit here today.

Ujjivan Small Finance Bank (SFB), another MFI, was among the worst to be hit by demonetisation.

MD of Ujjivan SFB, Samit Ghosh said that demonetisation had adversely affected the microfinance sector.

"We had to write-off Rs 3 billion for this and suffered losses in the first two quarters of the current financial year", he said.

Ghosh said "we are in the last leg of the demonetisation effect and things will be better by the end of this financial year", he added.

City-based MFI Village Financial Services (VFS) had also suffered the same consequences of demonetisation.

"Though we did not have to make any write-offs, recoveries are happening slowly", VFS managing director Kuldip Maity said.


Dear Reader,


Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel