Debt waiver rumours add to MFIs' woes

Repayments have been severely impacted in western part of UP, pockets of Maharashtra

Even as the after-effect of demonetisation continues to plague disbursements in microfinance institutions (MFIs), repayments have taken a hit for a different reason. Rumours of debt waiver in some states is leading to defaults in the sector.

According to the Microfinance Institutions Network (MFIN) data, available till December 15, repayments collection by MFIs stood at 84 per cent, against the general mark of 99 per cent, in the aftermath of demonetisation. 

The states in which rumours of debt waiver have led to defaults are Maharashtra, Madhya Pradesh, Uttarakhand, Karnataka and Uttar Pradesh (UP), though after rigorous advocacy programmes, the situation is slowly