Impact of Covid-19 Pandemic on Self Help Grou...

Impact of Covid-19 Pandemic on Self Help Groups (SHGs) and Microfinance Institutions (MFIs)

Author Name : Mr. Lakshminarayan. S, Dr. V.S. Somanath, Dr. Sushil Kumar Thakur

ABSTRACT

This paper focuses on the result of the pandemic which touched all states in the India, the severity of its impact was markedly different, from very strong in some countries to almost negligible in others. However, all countries implemented some form of a lockdown which affected MFIs and their clients. The microfinance institutions appear to have survived the first impact of the pandemic relatively well, although some had to make significant adjustments to their internal operations and make some difficult decision, like reducing their lending activities at the time when liquidity was most needed by the borrowers or reducing salaries for their employees. The clients, on the other hand, do not appear to have fared equally well. Many micro- and small businesses have been forced to close which consequently reduced their ability to earn revenue.

They were also subject to the indirect impacts from the disrupted supply chains and often inconsistent and insufficient public support during the pandemic. Only a small percentage of clients report improved revenue during the crisis.

The paper is based on the descriptive research study, which expresses the “phygital” approach and ends with a set of other specific endorsements for various stakeholders which would help the MFI clients to stabilize and return to normality and help MFIs to strengthen their capacity to respond more effectively to a systemic crisis like the COVID-19 pandemic.

Keywords: MFI,Covid-19, Micro and Small business, Clients& Phygital.