Balancing Lives and Livelihoods: How MFIs are Coping with COVID–19 Stress?

The COVID–19 pandemic has emerged as a black swan event for the financial sector and especially for the microfinance institutions. As the income of the majority of the people had drastically reduced during the lockdown period, their households faced a serious liquidity crunch and this, in turn, has severely impacted financial institutions. The pandemic has affected both small and large Microfinance Institutions (MFIs). Amongst various coping strategies of MFIs, the notables include conserving cash, holding back expansion plans, laying off staffs, salary reduction, extending moratorium, focusing on repayment collections, disbursing loans, facilitating convergence and shifting to digital mode. This paper investigates on how the MFIs has dealt with the COVID–19 stress and the possible strategies that can help them manage the emerging scenario.