Finshots Daily Are COVID-era bills finally coming to bite us back?
7 snips
Jun 11, 2025 The podcast explores the staggering ₹2,440-crore write-off in the microfinance industry, questioning whether it's a real reset or just a superficial fix. It discusses how COVID-19 has left borrowers struggling with subprime loans and rising defaults. Listeners learn about the challenges faced by high-risk borrowers and the urgent need for reform in microfinance practices to ensure sustainability. The conversation highlights critical issues that could significantly impact the industry moving forward.
AI Snips
Chapters
Transcript
Episode notes
Massive Pandemic-Era Write-offs
- The microfinance industry is writing off ₹2,440 crore due to pandemic-era loan defaults that accumulated over five years.
- This cleanup is significant because it addresses long-term bad debts, not just recent defaults.
Defaults Hidden in Aggregate Numbers
- Aggregate default rates appear low but mask high-risk borrower struggles, especially for subprime segments microfinance targets.
- These risky borrower defaults remain elevated years after the pandemic, showing a hidden problem.
Delayed Loan Restructuring Ends
- Lenders have delayed addressing pandemic-related bad loans by restructuring and reclassifying them.
- Now, they choose to write them off to reset balance sheets for a fresh financial year and lending capacity.