Apropos the PULSE survey findings that liquidity challenges are limited to a small number of institutions it is worth remembering that the survey was conducted just a few weeks into the crisis. My perception is that not enough inclusive finance service providers (FSPs) have undertaken in-depth cashflow planning over a 18-24 month period to be fully informed about their own liquidity challenges. It is not just cash today that is the issue; what about cash in 12 months time when the effects of limited disbursements today start to become apparent. It will mean lower payments from borrowers and less cash to lend. Perhaps borrowers are currently repaying out of their own reserves and will suffer crises 3-6 months down the line affecting the quality of FSP portfolios. What effect will this have on financial performance? What about the profitability challenges of the pandemic lockdowns? Will lenders be as willing to provide additional cash when they see lower profitability and declining portfolio quality along with lower cash inflows? Many FSPs have reported cash sufficiency at this stage, have they thought about how they will manage their businesses and restore equilibrium over the next two years?

Here is some in-depth analysis by M-CRIL's Sanjay Sinha on the liquidity challenges in India and Myanmar.