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Demonetisation, a double whammy for microfinance sector

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micro finance in india

Kolkata, November 13: The demonetisation of high-value currency notes has come as a double whammy for micro finance institutions (MFIs), which have temporarily stopped providing credit to their customers while loan repayments have also taken a major hit, industry sources said.

The institutions have deferred the repayment schedule of their borrowers for the next few days. In the last four-five days, repayment collections of about Rs 500 crore to Rs 600 crore ($74-89 million) has been deferred and with the lack of currency supply, the MFIs’ disbursement was also down by around Rs 600 crore.

“A lot of microfinance institutions put disbursement on hold because we need some clarity and it is currently quite ambiguous. We need clarity whether the institutions can collect Rs 500 or Rs 1000 notes from their borrowers as repayments of loans or not. We are not sure about it,” Gurugram-based Microfinance Institutions Network (MFIN) CEO Ratna Viswanathan told IANS on the phone.

The microfinance industry is cash-intensive. Most of the borrowers take loans in cash and they repay loans in cash, particularly in Rs 500 or Rs 1,000 notes. Even many of the borrowers who have bank accounts do not know how to transact through them. Thus, cash transactions in the rural economy, where most of the MFIs operate, become inevitable.

“The MFIN asked institutions to consider putting collections on hold for the next five-seven days. They have deferred the repayment schedule. Repayment collections of about Rs 500-600 crore have been deferred. Disbursement was also down by around the same amount in the last few days as there is lack of currency supply to advance loans,” Viswanathan said.

MFIs record a repayment rate of 99 percent but it took a blow after demonetisation. The sector is worried about taking the business forward in view of the increasing risk of defaults.

“With the scrapping of Rs 500 and Rs 1,000 notes, the industry has been facing a challenge. We are neither able to disburse, nor taking repayments from borrowers with old notes. Our repayment rate fell to 60 percent on Wednesday after the demonetisation was announced on Tuesday night.

“We have started deferring repayments and on Friday, the repayment was down to 70 percent from nearly 100 percent,” Village Financial Services’ Managing Director and CEO Kuldip Maity told IANS.

“Fresh and repeat disbursements have completely been put on hold temporarily,” he added.

It is a double whammy for the industry as borrowers do not possess much cash in hand with new currency to repay loans in time and due to lack of liquidity in the system, MFIs are not able to disburse loans.

“The situation is not expected to be prolonged beyond November 14 or so as we are in discussions with the regulator (Reserve Bank of India) and the Finance Ministry. We need to review the industry’s stance of deferring repayments if the situation prolongs,” Grameen Koota Financial Services’ Managing Director Udaya Kumar told IANS.

The industry, meanwhile, has approached the RBI and the Union Finance Ministry seeking a clarification on how the MFIs should deal with repayments.

“The notification regarding the demonetisation of high currency notes primarily talked about retail customers and there is no clarity about institutional customers.

“We want to know whether it is applicable to institutional customers. As far as repayment is concerned, we want a clear idea on how we can deal with it because the institutions are also in the loan repayment business. Institutions share each and every client’s data with the credit bureau,” Viswanathan pointed out.

The industry is yet to receive any clarity from the RBI and the Finance Ministry, she added.

IANS

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2018 Ducati Multistrada 1260 launched in India at Rs 15.99 Lakh

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2018 Ducati Multistrada 1260

New Delhi, June 18: Ducati India has just launched the 2018 Multistrada 1260 in the country at Rs 15.99 lakh (ex-showroom), while the Multistrada 1260 S has been priced at Rs 18.06 lakh (ex-showroom). Ducati India announced the launch through its social media on Tuesday.

The 1260 is the company’s flagship adventure-tourer and comes with a number of changes over the model it replaces. These updates include additional power, a revised chassis and new equipment.

The Multistrada gets a new 1,262cc, liquid-cooled, L-Twin motor. It produces 158hp at 9,500rpm, a 6hp increment over the 2017 Multistrada. Torque, too, has gone up by 1.5Nm, bringing the total up to 129.5Nm, which is delivered at 7,500rpm. The new engine features what Ducati calls Desmodromic Variable Timing (DVT), which, combined with Desmo valve actuation, results in good low-end torque. This tech also helps make the engine Euro-IV emission norms compliant.

The DVT on the Ducati Multistrada 1260 combines variable timing with desmo valve actuation which delivers an ideal combination of horsepower, low-rpm torque as well as meets Euro-4 emission norms. The Multistrada 1260 DVT engine is now capable of 160 PS at 9,500 rpm and 129.4 Nm at 7,500 rpm. However, it now gets a very flat torque curve, delivering 85 percent of peak torque from as low as 3,500 rpm, something ADV riders will greatly appreciate.

Internationally, the Multistrada 1260 is available in four variants, the 1260, 1260 S, the S D|air and the Pikes Peak – the last two will only come to India later, if at all.

To make the most of the new engine, the chassis has been retuned as well. The steering rake has been increased from 24 to 25 degrees, adding 5 mm of trail, and the swingarm is 48 mm longer.

This takes the wheelbase to 1,585 mm from 1,530 mm on the earlier model. The longer wheelbase should be able to facilitate more comfortable riding and better stability. The Multistrada 1260 has 48 mm inverted forks up front and a rear shock by Sachs, both fully adjustable.

The 1260 S also receives a new high-definition colour TFT display, navigation, semi-active Ducati Skyhook Suspension (DSS), as well as barrage of rider assist options including a vehicle hold control, as well as four riding modes – sport, touring, urban, and enduro.

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Weak global cues subdue equity indices; Sensex down over 200 points

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Sensex Nifty Equity

Mumbai, June 19: Weak global markets suppressed the key Indian equity indices on Tuesday afternoon with the benchmark 30-scrip Sensex of the BSE losing over 200 points so far.

Benchmark global markets were weighed down by signs of a resurgent trade war after US President Donald Trump on Monday reportedly threatened to impose tariffs on additional $200 billion worth of Chinese goods.

According market analysts, heavy selling pressure was witnessed in auto, metal and consumer durable stocks.

At 1.16 p.m., the wider Nifty50 of the National Stock Exchange (NSE) traded at 10,719.10 points, down 80.75 points or 0.75 per cent from the previous close of 10,799.85 points.

Similarly, the BSE Sensex, which had opened at 35,552.47 points, traded at 35,312.50 points (1.17 p.m.) — down 235.76 points or 0.66 per cent — from its previous session’s close of 35,548.26 points.

The Sensex has so far touched a high of 35,552.47 points and a low of 35,290.96. The BSE market breadth was bearish with 1,859 declines and 598 advances so far.

The top gainers on the Sensex were ONGC, HDFC Bank, Bharti Airtel, Asian Paints and ITC whereas Vedanta, Tata Motors (DVR) and Bajaj Auto, Adani Ports and State Bank of India were the major losers.

On the NSE, Gail, Bajaj Finance and HDFC Bank were the highest gainers while Vedanta, Hindalco Industries and Indian Oil Corp lost the most.

IANS
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Chanda Kochhar goes on leave, ICICI names Sandeep Bakhshi as COO

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New Delhi, June 19:ICICI Bank appointed Sandeep Bakhshi, who heads the bank’s life insurance arm, as chief operating officer.

The board of directors of ICICI Bank allowed its CEO Chanda Kochhar to go on leave until a probe into her role in an alleged conflict of interest in sanctioning loans to the Videocon Group was completed.

Bakhshi, who was the deputy MD of ICICI Bank before he was made the group’s insurance head, would run the bank during the absence of Kochhar.

All executive directors on the board of ICICI Bank and the executive management will report to him, the bank said.

Monday’s statement said Kocchar will remain in her role as MD and CEO of ICICI Bank and Bakhshi will report to her.

Earlier in the day, shares of ICICI Bank rose as much as 4 per cent, amid reports of reshuffle of top management. The stock gained 3.61 per cent to settle at Rs 292.50 on BSE. In intra-day trade, it surged 4.10 per cent to Rs 293.90.

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