The Risks in the Post COVID World with Harsh Shrivastava

Investec India hosted Mr Harsh Srivastava, CEO - MFIN, an Indian microfinance sector association. So far, most listed players have indicated as high as 50%+ collection efficiency in the first half of June’20. However, Mr Srivastava believes that this could still be limited to a few large players while most of the system might continue to struggle with collections of ~25% currently. This is expected to gradually improve to a 50-60% level by Sept’20 before fully normalizing by Dec’20. From a political risks perspective, between the two states of Bihar and West Bengal (WB) which are heading into elections, West Bengal seems more vulnerable but the industry seems to be banking on Bandhan to smoothen any unwanted events. Finally, liquidity flow to the sector remains the biggest risk which can force smaller MFIs to pursue aggressive collections which could lead to potential political risks.