Microlenders slipping in loan recoveries

Following demonetisation, the collection rate for 11 MFIs declined to 80 per cent

Micro finance institutions (MFIs) continue to face hard times even though the financial system as a whole is beating the effects of demonetisation. 

While the recoveries by MFIs improved in late November, things began to slip by the middle of December both on count of recoveries and credit disbursement, according to CARE Ratings.

For two weeks following the announcement of demonetisation on November 8, the collection rate for 11 MFIs declined to 80 per cent. Subsequently, it improved in the fourth week upon the Reserve Bank of India increasing the supply of new notes. 

The rating agency said the uptick in performance