Understanding the Vulnerabilities of Corona Outbreak Impact of Covid Outbreak followed by Country wide Lockdown on Microfinance Customers of Annapurna Finance
Introducing Annapurna Annapurna is one of the Top 10 NBFC MFIs in India 99% of Annapurna Customers are Women 85% of Annapurna’s customers are from Rural area The Dominant mode of lending is Group Lending, which is more than 85% of the Portfolio
Journey of Annapurna Finance
Operational Highlights 17 States es ₹ 4045 CR GL GLP 1.9 1.9 mn mn Clien ents 718 Branches es 5942 5942 Staffs
Study Background Research Re Objecti Objective Methods Methods Understand the impact of Descriptive study Covid on customers from Data Type: Both different states and Covid Qualitative and zones as decided by Quantitative, mostly closed government ended questions Recognize the impact on Mode of Data Collection: customers from different Telephonic Interview livelihood Identify the difference in the condition from the first Area Selection: Based on Annapurna’s Penetration study conducted three weeks back and impact of Corona outbreak. Get an idea about feasibility of business continuity given Area Wise Respondent the change in customers’ Selection: Random condition
Deep Diving in the Study Focus Major Customer er Major Res esponse e Ar Area eas Total Respondents 3739 3739 Segmen ents we e are e How the income has been influenced Inter eres ested ed in How long the customers can sustain in this uncertain situation Zone wise Distrib Zone wise Distribution of ution of R Respondents espondents How long the customers expects will Geography wise Segmentation take to come back to normalcy § State and regarding income generation § Covid Zone Livelihood wise Segmentation Ad Additional Res esponse e Red 19% Area Ar eas Green Orange 49% What are the coping mechanisms 32% taken by the customers What are their biggest pain points What is the basic prospect of loan recovery on the field
94% 94% 60% 60% 88% 88% Rural Dwel eller er Engaged ed in Ag Agriculture Women en Respondents are Representative of Annapurna Portfolio Male respondents After Agriculture, highly practiced are spouses who activities are Construction and own the phone Service Sector 56% 56% of the respondents have only one income generating activity
Highlights of the Study: Impact on Income 66% 66% of respondents have high impact on income i.e. income is compromised by more than 50% 27% 27% has experience partial impact i.e. income has suffered by 20% to 40% In most of the states, highly affected are more from the respondents with single income generating channel 94% respondents from Red Zone and 95% 94% 95% from Orange zone had their income hit highly or partially compared to 90% 90% of Green Zone respondents Sectors highly affected by Covid Outbreak are dominated by Wage Labours - In agriculture, construction and manufacturing sector more than 95% respondents are partially of highly affected Sectors like livestock, small business and service have recorded comparatively lower impact on the income of respondents
Highlights of the Study: Sustenance Capacity 80% 80% of respondents can manage their expenses in current condition for 2 months 45% 45% can sustain only one month Sustenance capability is higher in Red zone as 26% 26% can survive beyond three months compared to 17% 17% in Orange zone and 20% 20% in Green Zone Sustenance capability is lowest for wage labours engaged in Agriculture and Construction, around 50% 50% respondents can sustain only for a month Sectors like livestock, small business and manufacturing have high sustenance level as more than 20% 20% can manage more than 3 month in current situation, because of dominance od self employed people and expected relaxation during lockdown
Highlights of the Study: Resillience Perception 55% 55% of respondents thinks their income generation will be restored within 2 months after relaxations are allowed 19% 19% thinks they will recover within a month, among this 20% 20% are from Green Zone Red Zone respondents found more optimistic as 57% 57% has responded that the situation can be restored within 2 months from relaxation given by government Wage labours from Construction, Manufacturing and Agriculture are most uncertain about the restoration, causing more than 40% 40% respondent from the section mentioning they need more than 3 months to get back to normal
Findings related to Post Relaxation Challenges Livel elihood Res estarted ed Rever erse e Migration Repaymen ent Capacity after er Rel elaxation in in Fam amil ily 72% of the respondents from Assam has repaid More than 10% respondents during lockdown and 88% of the respondents In Assam and Maharashtra more in four states (Bihar, from the state doesn’t want moratorium than 70% cases the livelihood Jharkhand, Odisha and West In Jharkhand more than 80% respondents aren’t hasn’t restored at all Bengal) are exposed to this favouring moratorium challenge Ye Yes Not at all Not a t all 7% 7% 37% 37% No, 31% Finds Moratorium Useful Yes, 69% Partially Pa 59% 59% No, 94% Repaid during Lockdown No No Yes, 6% Completel Completely 93% 93% 4% 4%
Coping Mechanism by Customers Using Reduce Seek Monetary personal Community Limit household help from mobile savings to and consumption government recharge others meet the support expense Per ercen entage of of res esponden ents ma marking ng it it as as To Top an and Sec econd To Top co copi ping st stra rategy gy 57% 57% 23% 23% 10% 10% 2% 2% 5% 5% Best Strategy Second Best 0% 0% 27% 27% 38% 38% 18% 18% 6% 6% Strategy
Biggest Worries of Customers Getting Getting ill with Food and Paying Debt Lack of Cash back to Essential Instalments Corona Work Supplies Per ercen entage of of res esponden ents ma marking ng it it as as To Top Mo Most Pa Pain Po Point 50% 18% 25% 2% 1.5%
Difference between previous and Current Study of Customers about Lockdown Effect Lockdown 1.0 Study States: 7 44% 77% 55% 61% Lockdown 1.0 Customers: 1007 Respondents can Wants to avail Timeline Study Coverage Highly Affected Partially Affected sustain a Month Moratorium at max Facility States: 11 Lockdown 3.0 66% 45% 69% 27% Customers: 3739 Lockdown 3.0 Study
Sensitization and Awareness Generation Annapurna’s three-pronged Intervention Approach to for Product Designing the Crisis Management Intervention towards Cashless Business
Sensitization and Need Based Awareness Product Designing Sensitization Material for Sensitizing Customers New P Ne w Prod oduc uct P t Planni nning ng both Customers and about Corona and Employees To kickstart the livelihood of Preventive Measures existing customers through Phone Call Loan Type: e: Digital Emergency Loan Distribution of Sanitizer and Mask Product Devel elopmen ent Phase Covering 10000 Market Research ongoing Household Need eed Based ed Moratorium To avoid additional financial pressure on customer Customers are being made aware of the Moratorium Moratorium period as per individual customer need
Scope of Digital Transaction Online Disbursement QR Code based Payment 100% disbursement of Annapurna is Account wise VPA activated online, money directly goes to customers’ QR Code is displayed on website bank account ₹ Integration with Bharat Bill Payment Micro ATM Scheme Payment through POS Machine Currently integration in process Staff Assisted process ₹ To be online shortly Online Payment Portal Integrated with ICICI Bank Aadhar Enabled Payment Linked with Website Bio Metric Process OTP based login through registered Already being piloted in Haryana mobile number Currently working for MSME Customers
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