Kolkata: Microfinance is crucial to ensure liquidity at the bottom of the pyramid that holds the key to demand boost and economic recovery, said Kuldip Maity, MD & CEO of Village Financial Services (VFS).
He added that with over 10 crore women borrowers, credit portfolio of over Rs. 3 lakh crore (which is growing by 30-40% a year), and collection efficiency of 99%; microfinance had ensured rural liquidity even in the face of recent collapse of NBFC sector. Therefore, the sector is capable to repeat the story once again.
MFI activity is largely linked to the health of the farm sector, which is mostly unaffected by the pandemic. However, collections of MFIs have suffered due to restrictions on movement and the overall health concern. Also, the mismatch between collection and outgo during moratorium period remained a challenge, as issues regarding moratorium on loan repayment by MFIs remained unresolved, he further stated.
While expressing his views on the entry of banks in MFI space and if it poses any challenge for the existing micro lenders, Maity observed that with 38% market share, MFIs still hold a special position in the microlending sector. But, significant portion of country’s population still in the low-income band, who lack access to bank credit. So, there is space for all and I, therefore, do not see any threat on the MFI business due to entry of banks.
However, there is scope for level playing field. The issues over extension of moratorium to MFI sector is a case in point, he remarked.
On the economic scenario, he indicated that if infection remains under control; a good Kharif crop and infrastructure spending can trigger reasonable improvement in economic sentiments in the October-December quarter.
The Kolkata-based MFI, VFS currently caters to more than 5 lakhs women borrowers through its network of 246 branches in 13 states – WB, Tripura, Assam, Bihar, Jharkhand, Odisha, Sikkim, MP, Uttarakhand, Chhattisgarh, Meghalaya, Haryana and UP. The company wishes to expand in coming years and has a vision of enhancing coverage to 20 states.
Terming its ‘Customer-Connect’ initiative as the cornerstone of VFS’ operations, Kuldip Maity highlighted that it is imperative for every employee at VFS to ensure a positive vibe with the customer.
‘The idea is to build a bond beyond, and the importance of the programme was felt the most during the lockdown. VFS ground team kept in touch with each borrower on a daily basis through telephone. We shared their concern, assured every support, encouraged them to take precautions against COVID, provided them with masks, sanitisers etc,’ he added.