The Indian microfinance industry, a major source of funding for small borrowers, is staring at a major crisis due to the crisis triggered by the coronavirus outbreak.NBFC-MFIs are in bigger trouble since, under RBI rules, these companies have to give moratorium to borrowers. But, at the same time, NBFCs are not eligible to get moratorium from banks. Thus, it is a double whammy for these firms.This isn’t the first time MFIs are facing a crisis.Close In 2010, the Indian microfinance sector had faced a major crisis following a controversial legislation passed by the Andhra Pradesh government. About 35, 000 people lost jobs due to that crisis and significant chunk of money given by banks to MFIs turned bad. The sector never fully recovered from that crisis phase. The RBI had to form a new category of NBFC-MFIs to tighten rules for the sector. If the coronavirus-induced crisis prolongs, these firms may now see a return of the 2010 crisis. related news Gold imports dip 14.23% to $28.2 billion during 2019-20 Coronavirus impact | Online B2B platform Medikabazaar sees massive surge in enquiries Over 3,700 stranded foreign national sent back through Mumbai airport: MIAL In a note issued on April 15,… Read full this story
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