Kerala Flood Aftermath: Over 40% MFI Loans Stressed - CRIF Insights

Over 40 percent of Kerala's overall microloans portfolio was showing early signs of stress as of September-end, primarily due to the worst deluge in a century that ravaged the coastal state in the previous month, say a report.

"Nearly half of the overall Rs 6,000-crore loan book is in the seven worst affected districts and is leading to the stress", data collated by credit information firm Crif Highmark said in a report.

"Overall, early delinquency bucket of the state rose to a whopping 44.34 percent," the report said, adding these are loans which are not paid for about 30 days. In the days following the worst deluge in a century in August, there were concerns raised on the impact they will have on asset quality. The heavy downpour that ravaged the state for a fortnight ending August 21 caused the death of around 500 people and economic damages worth over Rs 40,000 crore.

Thrissur, one of the worst flood-hit districts in central Kerala, had the highest outstanding at over Rs 825 crore and also the highest stress ratio with 69.64 percent of the loans being unpaid for up to a month. All the other flood-affected districts--Ernakulam, Kottayam, Idukki (which had the worst landslides), Alappuzha, Wayanad, and Pathanamthitta-- have the one-month unpaid assets ratio at near or over 40 percent, it said.

Small finance banks account for as much as 41 percent of the loan outstanding but seem to be doing better from an asset quality perspective with only 1 percent of their loans being in overdue status for over 90 days as against 3 percent for microfinance institutions.

The report said, "loan disbursements have also taken a hit following the floods and pointed out that loans granted in the state stood at Rs 148.69 crore in September as against Rs 314.32 crore in the preceding month and at Rs 404.83 crore in July.

Original Source: PTI 
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