New Delhi Feb 22 (IANS) Asset quality of microfinance institutions (MFI) including small finance banks has come out of the impact of demonetisation and stabilised since June 2017 a Crisil report said here on Thursday.
"Portfolio delinquencies for a representative set of MFIs measured in terms of 30 and 60 days past due (dpd) have improved to 5.6 per cent and 5.3 per cent respectively as on December 2017 compared with 7.6 per cent and 6.8 per cent respectively as on June 2017 " the report said.
Asset quality has improved as evidenced by reducing portfolio delinquencies the rating firm said in its report adding that "cumulative collection efficiencies have risen to over 99 per cent for disbursements since April 2017".
High degree of investor support was reflected in the significant equity and debt raised after demonetisation the report noted.
"The reduction in delinquencies shows that borrowers are paying more than one instalment and there is recovery in the higher-delinquency buckets " said Krishnan Sitaraman Senior Director CRISIL Ratings.
However the weakening in asset quality was not pervasive post demonetisation as per the rating firm.
Asset quality of MFIs in Tamil Nadu Kerala Odisha West Bengal and Bihar remained largely resilient despite demonetisation and its aftermath and these states continue to exhibit strong collection performance with 30 dpd staying below 2 per cent it said.
Improvement in asset quality performance in Uttar Pradesh Maharashtra and Karnataka has been significant which were affected the most due to demonetisation according to the report.
In Uttar Pradesh 30 dpd reduced to an estimated 14 per cent as on December 2017 from 23 per cent in June 2017 it showed.
Strong investor appetite for both equity and debt capital market issuances has helped MFIs tide over the challenges it said.
"Since demonetisation CRISIL estimates MFIs have raised around Rs 4 000 crore of equity and Rs 7 000 crore of debt. Additionally banks and refinance institutions also continue to extend funding to MFIs."
--IANS
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