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Panel Discussion on Neutralizing Corona Impact on Microfinance

A webinar on Neutralizing Corona Impact on Microfinance was organized by the Centre for Self-help Development (CSD) on May 13, 2021. The second wave of COVID-19 in Nepal is more lethal and devastating. An effect was also felt in the microfinance sector.  The webinar was organized to discuss on the overall scenario of second wave of COVID-19 and its effect on microfinance sector as well as to determine future course of actions to be taken by the microfinance institutions (MFIs) and microfinance cooperatives (MCs). Seven panelists from MFIs and MCs representing each of the seven provinces of Nepal were invited as the panelists. They comprised of Mr. Sanjay Kumar Mandal Chief Executive Officer of  the Jeevan Bikas Laghubitta Bittiya Sanstha Ltd representing province 1, Mr. Prabhu Narayan Chaudhary, Chairman of the Mahuli Laghubitta Bittiya Sanstha Ltd representing province 2, Mr. Uday Raj Khatiwada, Chief Executive Officer of the Swabalamban Laghubitta Bittiya Sanstha Ltd representing Bagmati Province, Ms. Bimala Yogi, Chief Executive Officer of the Jalpa Samudayik Laghubitta Bittiya Sanstha Ltd, representing Gandaki Province, Ms. Sharada Kumari Khatri, Chief Executive Officer of the Upakar Laghubitta Bittiya Sanstha Ltd, representing Lumbini Province, Mr. Bishal KC, Chief Executive Officer of the Bauddha Grameen Multipurpose Cooperative Ltd representing Karnali Province and Mr. Ganesh Bahadur Chand, Chief Executive Officer of the Udayadev  Multipurpose Cooperative  Ltd representing Sudur Paschim Province. The webinar panel discussion was moderated by Mr. Shankar Man Shrestha, Chairman of the CSD.

Opening the discussion, Mr. Shankar Man Shrestha said, “The major challenge of MFIs currently is how to keep their staff and members safe from infection of corona. Most have overlooked the menace of COVID-19 and continued to their business as usual. They should stop their movement to hotspot areas and stop their operation therein. Some have been reported to have practiced forced repayment in even this juncture. Coercive repayment practice should not be followed when the borrowers’ businesses are crippled.” He added, “Now is the time to keep oneself safe and sensitize members to remain safe following safety measures. Genuine members who have taken right amount of loan will repay their loan installments when the situation become favorable to run their enterprises/businesses. Similarly, the staff should not indulge in activities that may infect other staff members. They should make regular contact with their members by telephone to enquire about their safety, health conditions and availability of food stuff.”

In the panel discussion, while speaking of overall scenario of microfinance, current activities that are being implemented as well as future course of actions after the advent of the second wave of COVID-19, Mr. Sanjay Kumar Mandal, CEO of the Jeevan Bikas Laghubitta Bittiya Sanstha Ltd (JBLBL) said,” During the second wave of COVID-19, 9 staff and 64 clients of JBLBL are currently infected and two have died. In the meantime, 88 family members of clients have been infected and 4 of them have died due to the complications.” He also said, “The infection rate is less in rural areas in comparison to urban areas. We have been supporting the local people and creating awareness campaign in partnership with local government. In order to minimize the impact of COVID-19, digital transactions have been massively exercised. The digital transaction is promoted so that those members who have the capacity and means to pay will be able to repay their loan amount with minimal social contact with the outsiders. JBLBL has developed special apps for this. The Centre Chiefs are supporting the clients in operating the apps while repaying loan. Consequently, center meetings are not conducted at present.” He added, “JBLBL is providing medical aids like chawanprash, thermometer and providing infected members with cash worth of Rs 2000 and also supporting non-members with cash assistance of Rs. 500. The doctors from Jeevan Bikas Samaj’s staff also visit the infected members.” He also spoke about the modality of communication between the staff members where he said, “Front line staff make daily communications with the clients by telephone. Similarly, the branch make daily communications with the district level offices and the district level offices with the head office to apprise on the latest developments.”

Another panelist Mr. Prabhu Narayan Chaudhary, Chairman of the Mahuli Laghubitta Bittiya Sanstha Ltd (MLBL) highlighted on the latest scenario and future course of actions of his organization. He said, “The situation in Province Number 2 is extremely vulnerable as the 8 districts have open border with India. In the first wave, 8 staff members were infected with COVID-19 but none has been infected in the second wave so far. Due to the statutory notice of the government, Centre Meetings have not been conducted for the time being. Currently head office is running with 20% and branch office with 25% staff of the total staff.” While mentioning about the status of loan repayment after the lockdown, he said, “The overdue loan from the first wave has not been recovered yet. We were still working on provisioning and loan detouring policy when the second wave hit. The situation in our organization is in dire condition because it is estimated that there is 32.6%  clients duplication. Local businesses, shops and construction sector have also been closed which are major income sources of majority of our clients. This will negatively affect our loan repayment. Our agony has been further aggravated after this lockdown.” On positive note he said, “Since MLBL operates in  rural areas, the impact of COVID-19 is not that severe.”

Mr. Uday Raj Khatiwada, CEO of the Swabalamban Laghubitta Bittiya Sanstha Ltd (SLBL) said, “After the first lockdown we developed  a directive which focused on client sensitization process, staff  safety plan which included insurance as well as code of conduct, providing masks, sanitizers and other materials. It also dealt with office safety measures to be taken by head office, area offices and branch offices.” In context of the spread of COVID-19 in his organization, he said, “In the first wave, 80 staff members were infected and in the second wave there are 124 staff members infected. The situation in some branches is so dire that all the staff members are infected by COVID-19.“ He said that the non-performing loan (NPL) of SLBL has increased as a result of COVID-19.  He said further, “The infected clients and the families will get Rs. 1500 and if the client is hospitalized she will get Rs 10,000 from the Client Protection Fund. All the 251,000 members have access to Covid Helpline Number.  The clients will be able to communicate with specialist doctors without any charge. The clients can also withdraw their savings if they need. The organization has planned to disburse business revival loan without service charge and without incorporating insurance scheme. A zoom meeting with Dr. Rabindra Pandey, Infectious Disease and Corona Specialist, was organized to acquaint the staff with COVID-19 symptoms and remedial measures. A total of 100 staff members, including those infected participated in this interaction meeting.”

Ms. Bimala Yogi, CEO of the Jalpa Samudayik Laghubitta Bittiya Sanstha Ltd (JSLL), also highlighted on the status as well as further course of actions of her organization after the advent of COVID-19. She said, “Currently 15 staff and 54 clients are infected by COVID-19.” Regarding the activities carried out to cope with the COVID-19, she said,” Sensitization of staff and clients on safety measures as well as distribution of masks and sanitizers to clients are continuing in the same way as it was carried out during the first wave of COVID-19. If a client is hospitalized due to COVID-19, a support of Rs. 10,000 is provided. Similarly, oximeters and thermometers have also been distributed to the clients. The organization has also facilitated clients and their neighbors in taking PCR test.  The Centre Chiefs are currently working as the focal point of the centers. Green Shop, a subsidiary of the organization, has been used to make doorstep supply of food grains to the clients. The Centre Chiefs have been actively participating in supply of food grains, dairy products and vegetables to the clients at fair price. The organization has facilitated in arranging beds and oxygen cylinders to severe case patients of COVID-19. The shop also made and distribute PPE and masks worth Rs. 17,000. The masks produced by the members have also been exported to the United States of America. Similarly, psychological counselling is also provided to the clients in depression.” Regarding the work plan ahead, she said, “Since Dang has five hospitals but lacks ICUs, the organization is collaborating with locals to construct 50 bed hospital with oxygen facilities in Dang. With regard to creating youth employment, technical supports are provided to the potential entrepreneurs  and marketing services for the meat and milk products of the members are provided through the branch offices at this juncture.”

Ms. Sharada Kumari Khatri, CEO of the Upakar Laghubitta Bittiya Sanstha Ltd (ULBSL), also highlighted on the activities carried out by her organization after the advent of second wave of COVID-19. She said, “Ministry of Land Management’s notice to landless families to fill up a form created rush which also increased infection rate of corona. As Banke district is hotspot of corona, 20 staff have been affected and 10 clients have died of COVID-19.” She said, “Last year we had provided COVID Loan with maximum limit of Rs. 10,000 for emergency purpose. The situation this time is graver than before. We are also working to provide higher package of Covid Loan and also work on digital banking as this has become necessity in Nepalgunj since clients of Upakar are afraid of leaving their houses.” She also said, “From May 15, 2021 we  will contact all the Centre Chiefs and update clients on their health as well as economic conditions.”

Mr. Bishal KC, CEO of the Bauddha Grameen Multipurpose Cooperative  Ltd (BGMC)  highlighting on the current situation of his organization said, “We have not prioritized loan collection but focused on the welfare of the clients as well as the staff members. The subsidiary of the BGMC, Mineral Water Enterprise, is closed due to lockdown but Dairy Enterprise is carrying out its services. BGMC is planning to establish an Oxygen Plant in collaboration with local municipality which will help in supply of oxygen to hospital for critical patients. Loan collection has also been halted for the time being keeping in view of the probable health hazards to the staff and the members.”

Similarly, Mr. Ganesh Bahadur Chand, CEO of the Udayadev Multipurpose Cooperative Ltd (UMCL), briefed on the ground realities of COVID-19 and the activities carried out  by his organization in Kanchanpur district after the advent of the second wave of COVID-19 and subsequent lockdown. He said, “UMCL has contributed Rs. 1 lakh to Mahakali Hospital for corona related activities and also contributed Rs. 10 lakh for oxygen cylinder management to Cooperative Campaign Fund. The objective of the fund is to support Mahakali Hospital for the treatment of corona patients. Currently 4 staff members have been infected and in the meantime 4 clients have also died due to COVID-19. The situation in Kanchanpur is grave because the infection rate is above 50% of PCR test cases. Regarding the financial support, Rs. 5000 will be given to COVID-19 infected clients. Similarly for staff members who have been infected by COVID-19, the organization will reimburse the payments incurred during the treatment. A total of Rs. 10 crore is set aside for business revival loan. The loan has a reduced interest rate of 13%.  Previously, to increase the level of income of clients, Agriculture Loan was disbursed to 2500 members and 3 Junior Technical Assistants (JTAs) were also hired for providing technical supports. Currently 1500 members have taken loan and 2 additional JTAs have been recruited.” With regard to to marketing of agriculture products he said, “We are arranging marketing of vegetables directly to consumers avoiding involvement of middle-men so that producers are able to get fair price of their products.” He said, “Mobile banking has been promoted and loan up to Rs. 30,000 is given to the clients at their doorsteps.”

In his closing remarks, moderator Shrestha said, “Among the problems MFIs have been facing, 95% have been created by the institutions and the staff themselves and 5% related to regulatory arrangements that may require review of concerned regulatory agencies. The CEOs should have to update on number of clients infected, those who have mild symptoms and others who need critical care as well as those who have died due to COVID-19. Similarly, they should also update data on the clients who can survive in the current situation and those who need immediate support. Timely and appropriate information helps in formulation of proper policy, strategy and working mechanism. In the current situation, the hard core poor who cannot survive on their own and need immediate financial support should be provided support from Corporate Social Responsibility Fund.” He further added, “Information on grassroots situation is necessary in such pandemic. If there is good coordination with the grassroots, effective and timely rules will be developed which will cater the need of the poor.” In another context, he said, “The priority of MFIs should be to prevent and control the spread of corona through awareness raising on safety measures on prevention. We should not portray the current condition of loan default as sole corona inflicted problem. The default rate in the MFI sector was 12% before the advent of COVID-19 pandemic and it increased to 17% during the first wave of corona and subsequent lockdown and after the end of first wave the default rate came down to 15%. The default rate of 12% before the first wave of corona was very high in comparison to the trends anywhere else. We have been doing things that is contrary to the best practice tenets of microfinance.  If we abide by best practice norms of microfinance, we will not face serious problems that acutely hamper the microfinance sector as a whole.”

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