The cumulative collection efficiency at microfinance lender Bharat Financial Inclusion progressively improved from 10% on November 11, three days after demonetisation, to 98% as on November 25, the company said on Tuesday.
The company had been continuing collections using the old legal tender for the first two days after the announcement.
After a clarification issued by the Reserve Bank of India on November 11, the company stopped accepting repayments in old Rs 500 and Rs 1,000 notes, which led to a slowdown in the efficiency of collections.
The company’s disbursements on a weekly basis have fallen 18-20% below their level in the quarter ended September and are restricted to recycling of cash within the system, Credit Suisse said in a note dated November 29.
In a presentation to investors, Bharat Financial Inclusion said disbursements had grown from Rs 173 crore in the week ended November 18 to Rs 253 crore in the week ended November 25.
“We continue to disburse in centres only if the collection efficiency of that centre is 100%,” the company said in the presentation. Disbursements have been restricted to recycling because of restrictions on withdrawals from the company’s current accounts. Disbursement to customer bank accounts have also been limited because of regulatory restrictions on withdrawals from ATMs and the irregular availability of cash at bank branches.
Credit Suisse said it would continue to monitor collections closely. “These details show that MFIs have managed the initial couple of weeks of the demonetisation fairly well. Surely the fear of bad bureau scores would have played in borrowers’ minds, but we cannot also rule out that borrowers could have dipped into savings in the initial couple of weeks (i.e. the next few weeks remain crucial to monitor),” it wrote in the note.