India: Kerala's Microfinance Industry Getting Back on Track After Floods
India, January, 14 2019 -
When the floods struck, the microfinance sector in Kerala stood at about Rs 210 crore and had a little over 1,20,000 borrowers.
KOCHI: The microfinance industry in Kerala is gradually getting back on track after the massive floods that havocked the state in August 2018. As the state government has relocated the families including the borrowers from the flood-affected areas to schools and nearby camps, their livelihoods were disrupted. Finally, most of them have managed to resume their occupations with the help of well-wishers from all walks of life. However, it is likely to take them many more months to rebuild their assets lost to the floods. Of course, such long-term asset building will require the support of the Government.
On our part, the microfinance industry will extend support to their income generating economic activities. When the floods struck, the microfinance sector in Kerala stood at about Rs 210 crore and had a little over 1,20,000 borrowers. Out of this number, about 36 per cent were located in the flood-affected districts of Thrissur, Kollam, Idukki and Kottayam.
Four months after the floods, we find that over 75 per cent of the affected borrowers and managed to come out of the crisis. The remaining 25 per cent are seen in different stages of recovery. On our part, we have reached out to all our borrowers and tried to understand their financial situation. As of now, only a small proportion of borrowers have three EMIs pending and we are working closely with them to offer solutions with the required flexibility. Over the next six months, we expect most of these customers to also come out of the crisis.
In order to handle the issue, we reached out to all our staff located in the affected branches and took them into confidence and guided them on how to face the crisis. They were told to be sensitive to the hardship faced by our borrowers and further instructed that no collections were to be made at the relief camps. Collections were made only through centre meetings. We provided our affected borrowers with multiple options including a one-month EMI deferment.
In addition, we offered higher ticket size loans to borrowers whose existing loans were on the verge of closure. We also extended livelihood support loans (LSL) with minimal documentation and an extended moratorium on EMIs which served as immediate relief for them. Thanks to these measures, the borrowers were able to maintain their credit history and credit bureaus without a flaw.