Covid-19 pandemic: Challenges and ways forward for the Indian microfinance institutions

Abstract

To contain the spread of the Covid-19 pandemic, the mandated social distancing and restricted market activities have adversely affected the employment and earnings of the poor who are considered the targeted beneficiaries of the Microfinance Institutions (MFIs). The MFI operation and more specifically fresh lending are under serious threat as the mode of operations primarily involve physical interaction while distributing credits at the clients' doorsteps, conducting periodic group meetings and carrying out regular collections. This short article attempts to analyze the various challenges that MFIs may encounter in their current and future operations due to the ongoing pandemic. It discusses how the government initiated coping mechanisms may help MFIs overcome or minimize the pandemic challenges. At the same time, MFIs' efforts towards continued services are expected to create a win-win situation.