Svasti Microfinance Policy on Restructuring 2.0

Policy on viable Resolution Plan for the Company’s Borrowers who are in financial stress due to the adverse impact of Covid19 (including the Second Wave) on their livelihoods

1)    Background

a)   Many customers’ household incomes have been affected because of the disruption of their livelihoods/ economic activity due to COVID19, including the second wave of infections that commenced in February 2021

b)   Post the moratorium period that ended on August 31, 2020, loan repayments have been due since 01-Sep-2020. The Company has adopted a Policy on Viable Resolution Plan for the Company’s Borrowers who are in financial stress due to the adverse impact of Covid19 on their livelihoods that was approved at its Board Meeting dated 19th November, 2020 (“Restructuring Policy 1.0”). Since September 2020, the Company’s collection efficiency has seen a steady improvement month on month until February 2021. However, the Second Wave of Covid19 commenced in Maharashtra in February 2020 and started expanding to other States in March and April 2021 leading to phased severe lock downs being implemented in several States. The Second Wave of Covid19 has had an adverse impact on the livelihoods of many of the Company’s customers, including some of those who have availed of restructuring of their loans under Restructuring Policy 1.0.

c)   During interactions between our branch staff and customers at collection meetings and otherwise, many customers have expressed their difficulties in repaying their monthly/ weekly loan installments as per their existing amortization schedules due to disruptions in their livelihoods/ economic activities due to COVID19, including its Second Wave and they have requested our branch staff to consider giving them more time to make their repayments. Such customers have clearly expressed to us that they are both willing and able to make their repayments to us, provided we give them sufficient time to recover from the disruptions of COVID19, including its Second Wave, as they need this time to get their regular livelihoods/ economic activities back on track. They have assured us that the repayments as per the revised schedule shall not go into default.

d)   As a result, we believe that it is necessary to give such customers more time to recover from the COVID19 disruption, including its Second Wave and then service their obligations. This would also ensure that the customer is not classified as NPA immediately resulting in further difficulty for the customer in going to their pre-COVID19 financial state.

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