Growth Pangs of the Pandemic, Revisited

Previous crises have demonstrated that financial service providers (FSPs) with financial strength can withstand the significant stress caused by COVID but it will take a well-crafted strategy that helps maintain the double bottom line – long term profitability of FSPs as well as the financial welfare of their borrowers – provided the microfinance sector as a whole makes a concerted effort. For this to happen, FSPs will need to deploy specialist loan restructuring skills that help to limit long-term loan losses while enabling borrowers to rebuild their economic lives.

Given the experience of previous crises in the microfinance sector in India, this Advisory Note sets out M-CRIL's expectation of a four-to-five-year adjustment and recovery period from the COVID crisis not just the two-year setback of demonetization.