MFIs' collections rebound in a big way, but delinquencies may surge

Industry-wide data on MFIs is hard to come by due to the lockdown, but an uptick in stress was evident even before the pandemic

Micro-finance institutions (MFIs) have something to cheer about: collections are back to 85 per cent of the pre-Covid lockdown levels. Yet Manoj Nambiar, managing director of Arohan Financial Services and chairman of the Microfinance Institutions Network, is not enthused: “The nature of this business is such that collections have to be closer to the 100 per cent mark.” On expected delinquencies after the loan moratorium ends today, he says “nobody has an idea on that front.” 
 
What explains the rebound in collections? “The resilience of borrowers is remarkable. A vast majority of borrowers are in the essential services’ supply