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Tahsildar visits village after complaints of harassment from microfinance institutions – The Hindu

January 11, 2025e-Paper
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January 11, 2025e-Paper
Updated – January 11, 2025 11:11 pm IST – MYSURU
Officials led by Tahsildar Girija visited the villages in Chamarajangar taluk on Saturday to look into the complaints of alleged harassment from microfinance institutions. | Photo Credit: SPECIAL ARRANGEMENT
Acting on directions from the Deputy Commissioner, Shilpa Nag, the tahsildar of Chamarajanagar on Saturday visited Heggadawadipura and Deshahalli villages in the taluk where loan borrowers are believed to be leaving the villages following alleged harassment from microfinance institutions.
The move by the district administration comes after mainstream media highlighted the plight of a student from Heggadawadipura village who poured out the problems faced by his family from a microfinance institution.
Tahsildar Girija and her team visited the villages and spoke to the people.
The tahsildar was accompanied by Taluk Panchayat EO Srinivas, Sirestedar Vinu, Revenue Inspector Satish, Panchayat Development Officer Mamatha besides, and lead bank representative Madhusudan.
The team visited the house of student at Heggadawadipura and spoke to his mother on the extent of loan availed through microfinance. The officials collected details on loans availed and the repayment done.
During the visit, the student’s mother told the officials that the representatives of the finance institution visited their house daily and allegedly abused them with foul language demanding repayment of loan. The alleged harassment from the microfinance company has also affected the education of her son, she claimed.
In response, the tahsildar told the family that she will look into the matter and take necessary action.
The tahsildar told the people to lodge complaints either with the district administration or the police or the local officials if any such institution was engaged in any harassment in future.
During the officials’ visit, they were told that some women had left Deshahalli and Heggadawadipura unable to bear the alleged harassment from the microfinance institutions and fearing action. “This has affected the education of their children,” people from these villages are said to have informed the tahsildar.
An awareness programme will be held in the villages after Makar Sankranti with regard to microfinance institutions, she said.
There is no need to fear microfinances and the people can directly complain to the district administration or the police if they resort to harassment, Ms. Girija said.
Published – January 11, 2025 07:47 pm IST
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Microfinance sector contracts below Rs 4 lakh crore amid loan disbursal woes – The Economic Times

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Microfinance delinquencies nearly double to over Rs 28,000 crore in a year – The Indian Express

India’s microfinance sector is experiencing a notable rise in delinquencies, particularly in the top ten states, despite the banking sector’s celebration of a 12-year low in non-performing assets (NPAs). Microfinance loans to low-income groups saw a significant surge in portfolio at risk (PAR) — loans with an overdue of 31-180 days — doubling to Rs 28,154 crore by September 2024 from Rs 14,617 crore a year ago.
The delinquencies in the 31-180 days overdue category work out to 6.8 per cent of the total portfolio of  Rs 4.14 lakh crore exposure of microfinance firms, including banks and NBFCs, as of September 2024 as against 3.8 per cent of Rs 3.84 crore portfolio in September 2023, says a report.
The incremental rise in the 31-180 days PAR category of microfinance institutions stood at Rs 8,117 crore for the quarter ended September, taking the overall incremental rise in PAR to Rs 13,468 crore for the 12 months ended September, according to a CRIF High Mark report. PAR was 4.6 per cent of advances in June 2024.
MFIs also cut down their exposure from Rs 4.32 lakh crore to Rs 4.14 lakh crore during the three months ended September 2024, CRIF report said.
Bihar, UP, Tamil Nadu, and Odisha accounted for 62 per cent of the incremental delinquency, with Bihar reporting a Rs 1,715 crore rise in delinquency for the three months ended September 2024. Bihar was followed by UP with a rise of Rs 1441 crore in PAR, Tamil Nadu Rs 1,009 crore and Orissa Rs 995 crore, the report said.
Several factors contributed to this decline in portfolio quality. MFIs were lending to over-leveraged borrowers and they taking on too much debt, leading to repayment difficulties. Further debt-waiver campaigns by states and politicians to waive off debts have disrupted the repayment cycle. There was high field-staff attrition with frequent changes in field staff, affecting the quality of loan disbursal and collection.
Elections and extreme weather conditions hindered loan recovery efforts. This rise in delinquencies may push up the credit cost for NBFC-MFIs, potentially impacting the microfinance sector’s growth.
The slowdown in the economy has also contributed to the indebtedness and stress in the microfinance sector. The Reserve Bank of India has set a common household limit of Rs 300,000 for loans to qualify as microfinance. This limit applies to all entities in the microfinance sector.
On the other hand, gross non-performing assets (GNPA) ratio of scheduled commercial banks (SCBs) declined to a 12-year low of 2.6 per cent of advances in September 2024, says the Reserve Bank of India.
India Ratings and Research (Ind-Ra) recently revised the outlook on the microfinance (MFI) sector to deteriorating from neutral, while maintaining a ‘Stable’ rating Outlook for FY26.
The agency says that there are multiple headwinds for the sector such as borrower overleveraging for both MFI loans and non-MFI loans, reduced centre attendance, high attrition at branch levels and instances of frauds, all leading to a higher operating and credit cost for the sector in the medium term.
“Ind-Ra has revised the sector outlook on MFIs to deteriorating from neutral, while maintaining a Stable rating outlook for FY26. Near-term challenges are likely to continue to play out with a recovery expected in 2HFY26. The Stable rating Outlook factors in adequate capitalisation and liquidity buffers and sufficient PPoP (pre-provision operating profit) margins which will help absorb the current asset quality downturn,” said Karan Gupta, Head and Director Financial Institutions, Ind-Ra.
The asset quality challenges faced by the sector and covenant breaches by players could lead to tighter funding from lenders. This could also lead to lenders assessing their incremental disbursements, thereby requiring monitoring of the rollover of the existing debt. This could impact the growth outlook for the sector in the medium term, it said.
Furthermore, the recent regulatory actions on some entities, including an embargo on disbursements amid concerns regarding loan pricing and increase in risk weighted assets (for banks), have added to the concerns of lenders to the sector.
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Uttarayan, or Makar Sankranti, is a widely celebrated festival in North India. In Old Ahmedabad, the festival has given rise to a new trend of “terrace tourism” where people can rent terraces to witness the intense kite fights and unique atmosphere in the walled city.
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