Delinquencies of microfinance institutions (MFI) are likely to increase by June amid the severe Covid crisis, according to Acute Ratings & Research.

"Acute expects 30-day delinquencies to increase at least by 30 per cent by June 2021 even if the pandemic intensity starts to taper down from the middle of May and may more than double if there is no taper down off the pandemic intensity and the local lockdowns continue till the end of Q1FY22," said a report.

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It noted that the impact of the second wave has not only been in the large cities but also in the hinterland, sparking a crisis in healthcare infrastructure. While no national level lockdown has been contemplated yet as in last year, the virulence of the second wave has led to lockdowns at local levels in various states and the intensity of such lockdowns may increase if the caseload continues to increase further.

This has already started to impact the improving trend in collections and disbursements particularly from the second half of April 2021.

Given the wider coverage of the virus across semi-urban and rural areas in this cycle, the risks of a sharper impact on the lives and livelihoods of the micro-finance borrower are higher in the near term, it said.

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