Loan waiver will not impact repayment collection for MFIs, says Bharat Financial Inclusion

KOLKATA: Bharat Financial Inclusion, India's second largest microfinance company in terms of loans outstanding, said that Maharashtra government's decision to waive farm loans would not impact repayment collection of the micro lenders.

Managing Director MR Rao told ET that his company has in fact witnessed a rise in repayment the day after the loan waiver was announced by the Bharatiya Janata Party run government in Maharashtra following which agitating farmers withdrew their stir. He said that collections for Bharat Financial and the microfinance industry as a whole improved in Uttar Pradesh too after Chief Minister Jogi Adityanath waived farm loans of small and marginal farmers.

"Hypothetically, loan waivers may leave farmers with more disposable cash," Rao said.

Most of Bharat Financial's loans are income generating loans with 6% to 8% being agricultural loans. Its loan outstanding as on March was around Rs 9000 crore.

"Our staff is trained to convey that the farm loan waivers announced by the government has nothing to do with lending by microfinance companies," Rao said.