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Microfinance industry expects biz to pick up: MFIN

Monday, July 17, 2017

The microfinance industry is expecting a pick up in business as the impact of demonetisation fades out, MFIN CEO Ratna Vishwanathan said. The trend of a decrease in growth continued in the last quarter of 2016-17 and was driven largely by the impact of withdrawal of high value notes from circulation, she said in an email reply to PTI.

However, the decrease is not entirely attributable to demonetisation per say as other external factors bringing down the overall growth, Vishwanathan said. However, as liquidity has "come back...We hope to see better growth figures for the next quarters," she added.

"Before demonetisation, microfinance sector was growing at the rate of over 80% and as the impact of demonetisation fades out, we expect the industry to come back on the earlier trajectory," Vishwanathan said. According to the Microfinance Institutions Network (MFIN) data, the number of clients provided credit decreased to 2.75 crore in the fourth quarter (January-March 2016-17) from 3.38 crore in the preceding three months.

On the impact of GST on the microfinance industry, Vishwanathan said "it is too soon to comment" upon the impact of the new indirect tax regime on the sector since it has been just few days after the roll out. "We will have to wait and see till the figures come in," she said.

Loan disbursed by MFIs in 2016-17 increased by 13% year-on-year reaching to Rs 50,266 crore. South India accounts for 31% of the total industry portfolio, North for 27%, West for 24%, and East for 18%.

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