‘CreditAccess Grameen has taken all necessary measures to strengthen the liquidity position’

Currently, the sector has a gross loan portfolio of around ₹2,31,788 crore and 5.89 lakh active customers as on March 31. The future growth potential of the sector remains intact, as there is still a large untapped opportunity to be addressed to meet the credit requirements of the unbanked, unserved and under-served people. Rural India, which accounts for 65 per cent of India’s population and 47 per cent of India’s GDP, only accounts for 10 per cent of the overall banking credit. Further, around 75 per cent of the unbanked households in India are in rural areas, served by unorganised players and moneylenders who charge exorbitant interest rates. The sector, with its large branch network, deep rural penetration and ability to provide door-step service to customers, is placed at a vantage point to address the micro-credit potential in India over the coming years.

Further to the Covid-19-induced lockdown since March, the RBI allowed lending institutions to grant moratorium to borrowers, whose economic activities were affected by the lockdown. In line with the RBI announcement, a majority of microfinance borrowers were granted moratorium on their loan repayments, depending on their repayment capability. While the majority of borrowers gradually resumed their repayments, there were certain customer segments that availed moratorium till the end of August. As per RBI guidelines, borrowers who avail moratorium were not supposed to be marked as overdue customers and, accordingly, there was no impact on the NPA levels in the microfinance sector.

The segment of migrant labourers was severely impacted in the initial days post-nationwide lockdown, when there was a sudden closure of their activities. There was large reverse migration of migrant labourers to their villages. However, as the lockdown restrictions were gradually relaxed, industries were looking forward to restarting their operations and providing various support measures to urge migrant labourers back to work. Certain sections of migrant labourers have gone back to their initial workplaces, some have migrated to nearby cities/towns for work, while some have stayed back to start new entrepreneurial activities in their home towns or engage in local agricultural activities. The microfinance sector is largely not affected by migrant labour issues, as the sector typically lends to the woman of the house with a stable residency track record.

‘Customer-centricity’ is the most important pillar of our business at CreditAccess Grameen. In today’s challenging times, we have tried to make our business processes and field operations as agile as possible to safeguard our ‘customer interest’. Continuous customer connect and strong customer relationships have helped us make an accurate assessment of our customers’ repayment capacity. While moratorium 1.0 was extended to all customers, moratorium 2.0 was extended only on a need basis. Additional funding support was extended to customers with a prompt repayment track. Customers were also provided with a cashless repayment option. Our collections resumed from June 1 and have gradually improved month-on-month. Our strong customer relationships, deep rural presence, majority of borrowers engaged in essential activities, and highly motivated field force helped us record relatively faster recovery in collections.

Over the last six months, the company has taken all necessary measures to strengthen its liquidity position. While we were witnessing improving collections trend, we focussed on engaging with our lenders to mobilise fresh funds and manage existing debt repayments. In these uncertain times, it is always prudent to build sufficient risk buffers in place. Even in normal times, we have always taken a conservative approach with early recognition of delinquencies and building adequate provisioning coverage. We are currently well placed with adequate risk and capital buffers in place.

Any changes in the company’s expansion plans due to the pandemic?

The company, on a consolidated basis, has a large and sufficient branch network of 1,388 branches spread across 14 States and one Union Territory in India to support its future growth plans. The company will evaluate its branch expansion plans, depending on how the on-ground situation evolves over the coming months.

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