Microfinance loan repayment has risen sharply to about 90 per cent on an average by the end of July from a low of 65-75% in May-June with economic recovery and the number of Covid-19 cases coming down.
Industry captains expect business to be back to full swing not before the third quarter as the impact of the second wave is still being felt while the sectoral loan volume decreases 14% in the April-June period.
Chandra Shekhar Ghosh, managing director at Bandhan Bank, the country's largest microfinance lender said, that "We are expecting recovery around the Durga Puja season. This is the time when business grows. But if the third wave comes, the recovery may be delayed by another quarter,"
About 60 percent of Bandhan's loan assets are unsecured micro loans.
Lenders across the board have raised their respective loan provisions in the June quarter to cover the possible future credit risk and took a hit on their profitability.
The sector’s gross loan outstanding fell 14% to Rs 2,14,528 crore from Rs 2,49,333 crore three months back.
Satin Creditcare Network chairman HP Singh said, "We expect business both in terms of loan disbursement and repayment – to be back to March level (pre-second wave level) by September."