Elections & loan waiver rumours hit Bharat Fin's collections

 Rumours of a potential loan waiver has impacted collections of Bharat Financial Inclusion, a micro finance company, in Uttar Pradesh and Maharashtra Rumours of a potential loan waiver has impacted collections of Bharat Financial Inclusion , a micro finance company, in Uttar Pradesh and Maharashtra. The company in an analyst call on Monday evening said collections, which took a hit after demonetization, deteriorated further in February ahead of elections in Uttar Pradesh and Maharashtra. So far, outstanding loans to the tune of Rs 306 crore have seen no recovery in the last two months. The company’s managing director and CEO of Bharat Financial MR Rao said given that elections were in its last leg, the intensity of the campaign for loan waivers had come down. 

However, collections would take a couple of months to normalize he added. In some parts of UP and Maharashtra, the company’s management conveyed that collections were improving. But the recovery is not expected to be a ‘V’ shaped one and that complete normalisation would happen over the next three or four months. The company said that while the women customers had the intention to repay, the cascading effect of demonetization was also impacting the ability to repay. The company’s management said that the intent of the borrowers was to repay and that the lender does not expect willful defaulters. The microfinance company also said that a majority of its borrowers had an outstanding amount of less than Rs 60,000 per borrower, indicating that the overall indebtedness was not high. Despite a pick-up in collections, recoveries are expected to take time.

Even though Rs 306 crore of loans have not seen any repayment, the microfinance lender says that it has the freedom of another 90 days to recover dues up to December. The lender will factor in provisioning after March 21 based upon the audit committee’s decision. Right now we are seeing improvement in repayment. While collections are slowly stabilising, disbursements too have picked up in January and February as demand for money remained unmet. Rao explained: “In November and December, we have maintained that demand for money is not being fulfilled by any other entity. The demand has got postponed. We have a healthy cash in bank balance; we see increase in disbursals compared to January. We are ahead of the guidance we gave. We expect March run rate to be higher in March and expect it to be Rs 9000 crore.”

 Bharat Financial Inclusion has also rolled out Aadhaar-enabled KYC in many of its centres and also getting a credit bureau check done through the same route. By 30 June 2017, all the branches will have the e-KYC facility. Customer acquisition has started in pockets. It is expected to pick up in the coming quarters. RBI dispensation is applicable for dues up to December. In that situation there is a representation made to RBI. We will wait for March 2017, the dispensation includes dues for January then we will see 

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