Micro-finance sector finally recovering from demonetisation shock: Industry

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.