'Loan disbursements of MFIs take a hit'

 Loan disbursements by Micro Finance Institutions (MFIs) have suffered during demonetisation period, Minister of State for Finance Arjun Ram Meghwal informed the Lok Sabha on Friday.

MFIs disbursed 59.22 lakh loans worth Rs 12,424 crore during October-December in 2016-17, against 79.82 lakh loans worth Rs 14,707 crore during the same period in 2015-16, he said in a written reply.

Total borrowings of NBFC-MFIs with asset size more than Rs 500 crore also suffered during the period, Meghwal said quoting Reserve Bank of India statistics. While the total borrowing was Rs 26.5 lakh crore at the end of September 2016, it came down to Rs 24.5 lakh crore by the end of December.

Separately, various agencies have conducted surveys to find that post demonetisation, the delinquencies in MFI loan books have been rising.

Rating agency ICRA recently downgraded its outlook on two MFIs to negative from stable majorly due to limited currency supply and disruption in borrower cash flows.

 MFIN recently wrote to the Reserve Bank of India last month expressing fears of huge non-repayments owing to demonetisation. Sources later said the RBI may offer a three-month repayment extension to customers whose loans were due from November 1 to December 31 last year.