Lockdown, moratorium are microfinance institutions' biggest fears

Despite an assuring outlook, large brokerages - whether Kotak Institutional Equities, Axis Capital, Ambit Capital or Credit Suisse - say the MFI sector may be in for a rough ride

Stocks in the microfinance space — whether CreditAccess Grameen or Spandana Sphoorty — and banks with high microfinance institution (MFI) exposure, such as Bandhan Bank, have shed 46–60 per cent in the past one month.

This, despite managements of Bandhan Bank and CreditAccess Grameen repeatedly trying to assuage investor concerns on their business outlook and explaining why a countrywide lockdown may only be a temporary hit on their financials.

In a recent call with analysts, Bandhan Bank said it has stopped fresh disbursements/collections, but has not seen MFI customers dipping into their savings yet. “As a long-term strategy, the bank