CreditAccess Grameen rolls out loan repayment moratorium options

The customer will not be reported as defaulter during the moratorium period. The regular reporting to credit bureaus shall commence after the repayment holiday period.

Apr 07, 2020 09:04 IST India Infoline News Service

CreditAccess Grameen
CreditAccess Grameen Limited (CAGL), country’s leading microfinance institution announced a brief business update, in the aftermath of COVID-19 outbreak on loan repayment moratorium options.

In accordance with the loan moratorium guidelines issued by RBI on March 27, 2020, CreditAccess Grameen Ltd. has framed its loan moratorium policy, approved by the Board of Directors. Moratorium will be applicable to all the existing borrowers across India. Moratorium will be allowed on all instalments falling due between March 01, 2020 and May 31, 2020. For the borrowers who have already paid instalments after March 01, 2020, required adjustments will be made so that moratorium is applicable for the remaining instalments till May 31, 2020. The asset classification will be according to RBI guidelines. The customer will not be reported as defaulter during the moratorium period. The regular reporting to credit bureaus shall commence after the repayment holiday period.

Mr. Udaya Kumar Hebbar, Mangaing Director and CEO, CreditAccess Grameen Ltd. said “The impact of COVID 19 has had a minimal impact on our business as we operate more in the rural areas and not in urban centers. However, we invoked our Business Continuity Plan and complied with government advisories keeping in mind the safety of our employees and customers. The RBI’s move to allow Banks, NBFCs and MFIs to extend a moratorium on term loans for 3 months is a very supportive move towards fighting the crisis. As an organization we aim to extend our continued support towards our customers and the society.”

Key Business Highlights:

Business impact & invocation of Business Continuity Plan (BCP): Business was as usual until 20th March 2020 with on-time centre meetings, disbursements and collections. From 23rd March 2020, in the event of national lockdown, the company took an immediate cognizance of customer and employee safety and complied with government advisories

Continued customer connect & proactive communication to ensure health and safety: Employees are maintaining regular connect with the customers and empathising with them in these testing times. This is crucial to further strengthen our customer relationship

Proven resilience of rural markets to external disturbances: As on date, there has not been any significant impact on the rural economy, especially in the regions where the company operates. The immediate fallout of lockdown has been more severe in urban locations, especially on the migrant population. Reverse migration might create some difficulties with concerned families for a temporary period

Robust liquidity position, liability profile & continued lenders’ support: The company maintains well diversified liability profile with more than 46% of borrowings in form of 2-6 year term loans. There are no borrowings in form of CPs or bonds from mutual funds. Hence the repayment schedule is well spread over longer term. The company continues to receive support from its diversified base of lenders.

Resilient business model with demonstrated ability for faster recovery: CAGL has a very robust operating model focused on rural markets (>82% rural) with very extensive customer engagement (weekly centre meetings) and unique customer centric approach (customised products with flexible repayment rates) leading to high borrower retention (86% vs. 70-75% for MFI industry).

CreditAccess Grameen Ltd is currently trading at Rs312.20 down by Rs9.6 or 2.98% from its previous closing of Rs321.80 on the BSE.

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