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Note ban crimps MFIs' securitisation by 21% in FY17

Last year MFI securitisation volumes had increased 80 per cent to around Rs 9,000 crore

Press Trust of India  |  Mumbai 

microfinance, banks

Hit hard by the note ban, of institutions (MFIs) fell 21 per cent to around Rs 7,150 crore in fiscal 2017 compared to Rs 9,000 crore last year, says a report.

Domestic rating agency said raised nearly Rs 5,500 crore through the route in the first six months of fiscal 2017 but this fell to just around Rs 1,650 crore in the second half.



Last year MFI volumes had increased 80 per cent to around Rs 9,000 crore.

"The dip in micro loan is primarily due to the impact of the on the portfolio of most

"Investors also adopted a wait and watch approach for this asset class on the back of a rapid increase in the portfolio at risk numbers in the softer delinquency buckets, and the uncertainty around the portfolio performance going forward," said in a note today.

The impact of the unexpected also magnified for this asset class due to high on for both collections and disbursements to MFI borrowers, the agency said, adding the crunch resulted in loan repayments being severely impacted.

"Additionally, local political interference and rumours of loan waiver in some areas led to further disruption in the collection process. This was primarily seen in states where local body or assembly elections were due," it said.

The agency further said it's rated MFI transactions were strong till October 2016 collection with monthly and cumulative collection efficiency in the 98-100 per cent range.

"However, post-demonetisation, the monthly collection efficiency of the pools declined significantly in November and December 2016 to 91 per cent and 82 per cent, respectively," the report said.

Post-demonetisation, there was also a notable slowdown in loan disbursements due to lack of currency availability in the initial period, and also on account of becoming more cautious while offering incremental loans, especially in geographies where collections were low.

Due to sharp decline in disbursements, additional funding requirement for also reduced, which further took a toll on volume, as around 25 per cent of incremental funding requirement of was being met through the route, it said.

Majority investors in transactions were banks, with their prime motive for investing in these transactions being to meet their priority sector lending targets, it said.

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Note ban crimps MFIs' securitisation by 21% in FY17

Last year MFI securitisation volumes had increased 80 per cent to around Rs 9,000 crore

Last year MFI securitisation volumes had increased 80 per cent to around Rs 9,000 crore Hit hard by the note ban, of institutions (MFIs) fell 21 per cent to around Rs 7,150 crore in fiscal 2017 compared to Rs 9,000 crore last year, says a report.

Domestic rating agency said raised nearly Rs 5,500 crore through the route in the first six months of fiscal 2017 but this fell to just around Rs 1,650 crore in the second half.

Last year MFI volumes had increased 80 per cent to around Rs 9,000 crore.

"The dip in micro loan is primarily due to the impact of the on the portfolio of most

"Investors also adopted a wait and watch approach for this asset class on the back of a rapid increase in the portfolio at risk numbers in the softer delinquency buckets, and the uncertainty around the portfolio performance going forward," said in a note today.

The impact of the unexpected also magnified for this asset class due to high on for both collections and disbursements to MFI borrowers, the agency said, adding the crunch resulted in loan repayments being severely impacted.

"Additionally, local political interference and rumours of loan waiver in some areas led to further disruption in the collection process. This was primarily seen in states where local body or assembly elections were due," it said.

The agency further said it's rated MFI transactions were strong till October 2016 collection with monthly and cumulative collection efficiency in the 98-100 per cent range.

"However, post-demonetisation, the monthly collection efficiency of the pools declined significantly in November and December 2016 to 91 per cent and 82 per cent, respectively," the report said.

Post-demonetisation, there was also a notable slowdown in loan disbursements due to lack of currency availability in the initial period, and also on account of becoming more cautious while offering incremental loans, especially in geographies where collections were low.

Due to sharp decline in disbursements, additional funding requirement for also reduced, which further took a toll on volume, as around 25 per cent of incremental funding requirement of was being met through the route, it said.

Majority investors in transactions were banks, with their prime motive for investing in these transactions being to meet their priority sector lending targets, it said.
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Business Standard
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Note ban crimps MFIs' securitisation by 21% in FY17

Last year MFI securitisation volumes had increased 80 per cent to around Rs 9,000 crore

Hit hard by the note ban, of institutions (MFIs) fell 21 per cent to around Rs 7,150 crore in fiscal 2017 compared to Rs 9,000 crore last year, says a report.

Domestic rating agency said raised nearly Rs 5,500 crore through the route in the first six months of fiscal 2017 but this fell to just around Rs 1,650 crore in the second half.

Last year MFI volumes had increased 80 per cent to around Rs 9,000 crore.

"The dip in micro loan is primarily due to the impact of the on the portfolio of most

"Investors also adopted a wait and watch approach for this asset class on the back of a rapid increase in the portfolio at risk numbers in the softer delinquency buckets, and the uncertainty around the portfolio performance going forward," said in a note today.

The impact of the unexpected also magnified for this asset class due to high on for both collections and disbursements to MFI borrowers, the agency said, adding the crunch resulted in loan repayments being severely impacted.

"Additionally, local political interference and rumours of loan waiver in some areas led to further disruption in the collection process. This was primarily seen in states where local body or assembly elections were due," it said.

The agency further said it's rated MFI transactions were strong till October 2016 collection with monthly and cumulative collection efficiency in the 98-100 per cent range.

"However, post-demonetisation, the monthly collection efficiency of the pools declined significantly in November and December 2016 to 91 per cent and 82 per cent, respectively," the report said.

Post-demonetisation, there was also a notable slowdown in loan disbursements due to lack of currency availability in the initial period, and also on account of becoming more cautious while offering incremental loans, especially in geographies where collections were low.

Due to sharp decline in disbursements, additional funding requirement for also reduced, which further took a toll on volume, as around 25 per cent of incremental funding requirement of was being met through the route, it said.

Majority investors in transactions were banks, with their prime motive for investing in these transactions being to meet their priority sector lending targets, it said.

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Business Standard
177 22