MFIs flag rural borrower distress to RBI

The pandemic’s second wave is affecting rural households far more than last year, with a large number of microfinance staffers, borrowers and their families hit by COVID-19, impacting many more livelihoods than during the first wave. The trend, which poses a higher risk of loan delinquencies if the rising infections don’t taper off by the end of May along with mobility restrictions, was flagged by microfinance institutions to the Reserve Bank of India Governor Shaktikanta Das on Monday, according to two industry representatives who attended the meeting. Urging the central bank to grant forbearance for borrowers unable to pay instalments with some flexibility for the MFIs to restructure affected loans, industry representatives observed that while collections had been normal till early April -- in the wake of the gradual recovery -- they had slowed down since then. “A larger proportion of borrowers and their families are affected by the illness, even in rural areas, in contrast to last year,” an industry executive said, speaking on condition of anonymity. it would be better to give MFIs freedom to restructure loans based on requests without attracting the provisioning norms,” said another MFI official.