New Delhi, December 15, 2016: We interacted with the senior management of Equitas to assess the impact of demonetization on its business. Equitas transitioned into a small finance bank in Q2FY17, and as a bank could accept deposits in the form of demonetized 500/1000 rupee notes. This drove ~100% collection efficiency across key segments. 100% of MFI, 60% of UCV and negligible MSE collections are in cash.
Equitas may not face any strain on asset quality due to proactive collection efforts, but there are still a couple of minor negatives: (1) cash disbursements in MFI segment have almost stopped;(2) having only 5liability branches operational meant Equitas missed out on an opportunity to garner large, low-cost deposits. Growth will remain a challenge since most of low-ticket size disbursements in the MFI segment (~50% of AUM) are in cash and will be impacted by currency crunch.
Corporate Comm India(CCI Newswire)
