Covid -19 Pandemic in India and Impact of Microfinance Companies and Non Financial Banking Companies Microcredit Loans to Poor's Households through the Self Help Groups (SHG) in West Bengal State and also in India
Ministry of H&FW, Govt. of India, brought a temporary but effective solution to tackle covid- 9 pandemic in India, before could coverage 2 doses covishelid or covaccine, strictly ordering to follow mandatory COVID-19 protocols and pan India or partial lock down from 2020 February to 2022 December specially in all containment zones. Obviously Microfinance sectors should get hit by pandemic and should face a big financial crisis. But it was different for MIFs or NBFCs. Microloan disbursement jumped about 20% in December 2022 quarter to Rs 77,877 crore, over Rs 65,392 crore in December 2021, backed by 14% rise in numbers of new women borrowers. The industry grew almost 19% compared to 14% rise in number of borrowers. In terms of regional distribution of gross loans, east & northeast and south accounting for 63% of the total portfolios. Bihar is the largest state in terms of portfolio outstanding followed by Tamil Nadu and West Bengal with high amount of loans in nine districts of West Bengal, where microfinance companies operated through field officers, targeting illiterate, semiliterate, poor married men/ women of locality in name of services, social or families welfare, women empowerment, poverty upliftment, education, health care, employment generation by microloan through a group of married women. According to a report “it was observed that average outstanding per unique borrower is highest in West Bengal and in Assam, for past three years (2019-2023). 40-50 percent of microfinance loan portfolio in both Assam and West Bengal are from one or two institutions. According to SIDBI and Equifax’s Microfinance Pulse, Vol VII, November 2020 report on microfinance showed that during Covid- 19 pick lockdown times, when many people in India were dying, in the Q2 of the FY 2020-21, 300% more micro loans were disbursed in India of —worth Rs 323.75bn—vis-à-vis Q1 of the same FY in terms of volume and 393% more in terms of value. Around 70% of these loans are in buckets of Rs 30,000 to Rs 50,000. Small and micro loans distribution by MIFs and NBFC-MIF/LC with unusually high interest to large segments of the Indian population in unorganised sectors with poor livelihood domains are with ulterior motives for company's commercial interests, profits but nothing else. These legal / illegal money lending companies (against PMLA laws, section 4) played a key role between nationalised or commercial lending banks taking mild to moderate risk for their better returns through EMIs. This sector now plays a strong position, when it comes to return on their investment in monetary terms by loan collectors efficiency.MIFs works on a crude principle of, contact with clients to generate false trust on them regarding social, economic upliftment of poors when accepting their loans hiding I'll effects of loans, overworks, various illness, indebtedness, absconding, suicide, on the family in near future. In 2020, lockdowns for spread of COVID-19 virus brought almost every business to a halt, (except essential services). Worst affected were small enterprises with little or no reserves and high liquidity turnover operations, which was the case for typical micro and small businesses. Microfinance companies shifted their motivation to neoliberal models dominated by capitalistic commercial private banks. All MIFs/ NBF -MIFs motivated today expanding their profitable business through legal / illegal money lending during covid period, targeting new illiterate/ semi literates married women borrowers who required liquid cash money to sustain their life, for medical expenditures, to run their micro enterprises during pandemic. To operate a smooth financial profitable business in the post COVID period, MFIs have to rely on trained loan officers /Recovery Agents and have to put poor loan borrowers at very high level pressures, threats, nuisance to ensure their traditionally high repayment rates. Loan officer's these acts to be considered as a criminal offence done in the eyes of Indian laws and human rights and necessary action to be taken by local administration or police station under PMLAct. Government now trying to smooth out its operations through rescheduling of loans. RBI a regulator of financial sector announced various steps to limit macro effect of pandemic on overall financial system of country, including increase of moratorium period for loans for next 6 months, rebate of interest rate, special package etc; To help MFIs, to address their liquidity issues, the government of India offered near zero interest loans through its financial arms — the Small Industries Development Bank of India, the National Bank for Agriculture and Rural Development, and the Reserve Bank of India’s Targeted Long-Term Repo Operations. At the regulatory level, they should be directed to be most conscious of their borrowers' well being. They should be ordered to adhere to industry's code of conduct requiring fair interactions, suitability, loan transparency, interest rate and addressing customer grievances officially. MFI/ NBFCs customers must be offered the opportunity to take advantage of the moratorium on their loan repayments with lowest EMI based on the monthly income of the family. And wherever necessary, MFIs worked to create awareness about the implications of the moratorium on interest/repayments, so that customers could make informed decisions
Year of publication: |
[2023]
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Authors: | Bhattacharya, Prof.Dr.Pranab Kumar ; Bhattacharya, Rupsha |
Publisher: |
[S.l.] : SSRN |
Subject: | Indien | India | Mikrofinanzierung | Microfinance | Coronavirus | Selbsthilfe | Self help | Armutsbekämpfung | Poverty reduction | Armut | Poverty |
Saved in:
freely available
Extent: | 1 Online-Ressource (25 p) |
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Type of publication: | Book / Working Paper |
Language: | English |
Notes: | Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments April 27, 2023 erstellt |
Other identifiers: | 10.2139/ssrn.4430944 [DOI] |
Source: | ECONIS - Online Catalogue of the ZBW |
Persistent link: https://www.econbiz.de/10014354717
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