{"id":5076,"date":"2017-07-20T17:50:01","date_gmt":"2017-07-20T17:50:01","guid":{"rendered":"https:\/\/sunkrish.com\/?p=5076"},"modified":"2017-07-20T17:53:21","modified_gmt":"2017-07-20T17:53:21","slug":"micro-finance-rebound-shows-rural-india-recovering-from-demonetisation","status":"publish","type":"post","link":"https:\/\/sunkrish.com\/index.php\/2017\/07\/20\/micro-finance-rebound-shows-rural-india-recovering-from-demonetisation\/","title":{"rendered":"Micro-finance rebound shows rural India recovering from demonetisation"},"content":{"rendered":"
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The micro-finance industry is rebounding, real rural incomes are rising and unemployment is falling, according to brokerage Motilal Oswal Securities and an Indian unit of HSBC Holdings in analysis that contrasts to the distress that\u2019s swept the farming sector<\/figcaption><\/figure>\n

India\u2019s vast rural hinterland, which makes up 70% of the country\u2019s population, is showing signs of recovery from last year\u2019s cash crunch, boosting optimism that increased spending will help the broader economy regain its vigour.<\/p>\n

The micro-finance industry is rebounding, real rural incomes are rising and unemployment is falling, according to brokerage Motilal Oswal Securities Ltd and an Indian unit of HSBC Holdings Plc in analysis that contrasts to the distress that\u2019s swept the farming sector.<\/p>\n

\u201cWe believe repayments and improved collection trends have increased the confidence of companies to start disbursing loans at a healthy pace again,\u201d Mumbai-based Alpesh Mehta and colleagues wrote in a report from Motilal Oswal.<\/p>\n

India\u2019s micro-finance industry, which provides small loans to entrepreneurs and business owners who have little collateral, was slammed when the government withdrew high-denomination bank notes from circulation late last year in a bid to stamp out corruption. And while farmers have taken to the streets across India to protest plunging food prices, labourers who get paid a wage to work the land have actually seen their incomes rise after last year\u2019s good monsoon, the HSBC economists wrote.<\/p>\n

Loan collection rates in Uttar Pradesh, India\u2019s largest and most populous state, are largely back at about 98% levels, up from less than 50% after demonetisation, Mehta, Piran Engineer, and Subham Banka said in their 3 July note. Other major states such as Karnataka are displaying \u201cmuch improved collection trends,\u201d they said.<\/p>\n

Micro-finance disbursements, which grew 13% last year compared with 80% the prior year, are expected to return to pre-ban levels in three to six months, according to Motilal Oswal.<\/p>\n

Gold loan company Manappuram Finance Ltd has risen 68% from its low after demonetisation in November and Bharat Financial Inclusion Ltd, India\u2019s largest listed micro-finance firm, has rebounded 64% over the same time frame.<\/p>\n

However, the state of Maharashtra, home to India\u2019s financial capital, Mumbai, is lagging other states and continues to face delinquency pressures, with about 20% of loans unpaid 90 days past due, according to Motilal Oswal.<\/p>\n

Interactions with micro-finance companies reveal no expectation of disruption from the rise of farm loan waivers in Indian states but instead a focus on the effects of demonetisation, the report said. Microfinance Institutions Network\u2014India\u2019s largest group of microfinance firms\u2014reported that \u201cdemonetization severely impacted the micro-finance business in multiple ways including slowing down of growth due to non-availability of cash for a few months.\u201d<\/p>\n

Motilal intends to observe delinquency trends for a few more quarters before reaching conclusions over the impact of waivers on micro-finance. Maharashtra, Punjab, Uttar Pradesh have all announced, waiver programs.<\/p>\n

The rise in credit growth at the micro-finance level is complemented by a rise in rural incomes and purchasing power, according to HSBC Securities and Capital Markets (India) Pvt. Ltd.<\/p>\n

\u201cMacro indicators have improved\u201d in rural India, HSBC economists Pranjul Bhandari, Aayushi Chaudhury, and Dhiraj Nim said in their 10 July note. The plunge in inflation has helped boost annual real income growth to just under 4% from contracting levels a year ago while rural unemployment has sunk from about 9% last September to around 4%, according to HSBC.<\/p>\n

Normal rains so far in 2017 and a bumper crop in 2016 after a two-year drought have generated more jobs for rural Indians who work the land\u2014some 70% of rural households who are \u201clandless, according to HSBC.<\/p>\n

That\u2019s help pushed up two-wheeler sales and the production of consumer non-durables in this segment, according to the HSBC report. Shares of companies with substantial rural customer bases are experiencing steady growth.<\/p>\n

While falling farm prices have hit many rural Indians hard, they have also boosted purchasing power and consumption among the population which could help a broader recovery in the Indian economy that\u2019s suffering from a slowdown in growth, soured loans and weaker manufacturing sector.<\/strong><\/p>\n

Source: http:\/\/www.livemint.com\/Industry\/CANuZ2YGAYheLS4lgPR4dO\/Microfinance-rebound-shows-rural-India-recovering-from-demo.html<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

India\u2019s vast rural hinterland, which makes up 70% of the country\u2019s population, is showing signs of recovery from last year\u2019s cash crunch, boosting optimism that increased spending will help the broader economy regain its vigour. The micro-finance industry is rebounding, … Continued<\/a><\/p>\n","protected":false},"author":1,"featured_media":4257,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[15,4,493],"tags":[311,314,903,305,720,486,468],"class_list":["post-5076","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-corporate-business-advisory-services","category-financial-corporate-services","category-economy-business-updates-corporate-affairs","tag-corporate","tag-debt","tag-demonetisation","tag-economy","tag-hsbc-holdings-plc","tag-maharashtra","tag-micro-finance"],"_links":{"self":[{"href":"https:\/\/sunkrish.com\/index.php\/wp-json\/wp\/v2\/posts\/5076","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/sunkrish.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/sunkrish.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/sunkrish.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/sunkrish.com\/index.php\/wp-json\/wp\/v2\/comments?post=5076"}],"version-history":[{"count":2,"href":"https:\/\/sunkrish.com\/index.php\/wp-json\/wp\/v2\/posts\/5076\/revisions"}],"predecessor-version":[{"id":5078,"href":"https:\/\/sunkrish.com\/index.php\/wp-json\/wp\/v2\/posts\/5076\/revisions\/5078"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/sunkrish.com\/index.php\/wp-json\/wp\/v2\/media\/4257"}],"wp:attachment":[{"href":"https:\/\/sunkrish.com\/index.php\/wp-json\/wp\/v2\/media?parent=5076"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/sunkrish.com\/index.php\/wp-json\/wp\/v2\/categories?post=5076"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/sunkrish.com\/index.php\/wp-json\/wp\/v2\/tags?post=5076"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}