India’s microfinance institutions (MFIs), the last-mile connect for credit, are on a ventilator and would soon run out of cash.
That is because borrowers aren’t paying them back given that the nationwide lockdown to curb the spread of covid-19 has put their very subsistence at risk.
The worst off do not have liquidity to last even for more than a month and time is running out, according to CARE Ratings Ltd.
On average, lenders keep cash to suffice for 2.5 months and depend on constant collections to match their cash flow needs. But the collection tap is dry now with no indication of any improvement as the outbreak ravages livelihoods. “As the collections from borrowers could remain muted for some time post the lockdown is eased, the