Assam microfinance ease package ‘useful’ from asset quality view

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Assam’s microfinance relief scheme achieves a “positive step” from the view of asset quality and the relief distributed is anticipated to decrease near-term loan losses for money lenders, who were strained by the Covid-19 pandemic. The financing of the scheme will occur in the middle of August after the Assembly is anticipated to accept the budget announcements by the last of July.

The government of Assam raised this scheme in a structured way that is to induce the frequent borrowers and face the demand of the pressurized borrowers. And It has also an objective to demoralise lenders and borrowers from over-leveraging. From the asset quality perspective, this is a positive development also. The Investment Information and Credit Rating Agency of India Limited(ICRA), sector head & vice president, Sachin Sachdeva pointed out that the relief given is anticipated to decrease the near-term loan losses for the lenders, who were impacted by the pandemic.

He also said that the operationalisation of policy still would be a threat as multiple lenders have subjection to borrowers and extra, forming the borrowers recognise the eligibility criteria would be hard, which may affect the reimbursement actions of non-eligible borrowers. And after the state Assembly had proceeded with the Microfinance Institutions Bill,2020 in December last year the collection effectiveness plunged dramatically in Assam. And chats of a feasible surrender of microloans ahead of the elections. There had been delays in reimbursement of money from the borrowers, and because of the uncertainty over the classification of the proposed relief package, persons were owed back payments.

 The Microfinance Institutions Network (MFIN) director and CEO Alok Misra, said during a virtual press conference on the Assam relief package on the last day, that the collection effectiveness is expected to return to normal within three months as after the declaration of the scheme borrowers have developed to contact with the lenders on repayment matters. And its chairperson Manoj Kumar Nambiar pointed out that the relief measure has pivoted on responsible borrowing, repayment and lending. They have the sincerity to the efforts of the government to pursue the flow of credit to the low-income households in these hard periods.

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