India Infoline offers top-up loans, but without moratorium


Mumbai: At a time when several banks and most shadow providers are saving cash, IIFL Finance is offering top-up loans to their existing customers. Caveat lumber: They may not avail themselves of the three month repayment moratorium.

Although intuitive at first glance, the offerings make sound business sense. Not only will such loans allow for expansion of loan books in these lean times, but the premise will also help prevent or delay criminal activity and non-performing assets on accounts that were standard before closing began.

In a way, these are therefore akin to a shadow stimulus that helps traders meet their immediate capital needs.

“We only offer these loans to borrowers without maturity and have an average seasoning with us over 24 months with the current credit score above acceptable standards. And we have security for the loans, “said CEO Monu Ratra, IIFL Home Economics. “We have sufficient liquidity with us, and the clients seeking such loans are those who may be in need.”

The document it shared with potential customers said the offers require “borrower (s) consent to waive the moratorium … three months.”

The central bank has allowed financiers to grant a moratorium on accounts that are standard but default (failure to pay in 30 to 90 day buckets). In such cases, the lender must provide at least 10% spread over March and June quarters with no less than 5% in each quarter.

The move, of course, has its share of critics.

Why would a borrower prefer a top-up loan and not opt ​​for a moratorium? In both cases he must pay similar interest. Although we provide top-up loans in the home loan segment, we do not make any offers with the condition of opting out of moratorium, ”said a senior manager at one of the leading banks.

Auditors reportedly want lenders to provide more than 10%, depending on the quality of the asset.

“But NBFCs and HFCs that fall under Ind-AS may need to make more in line with the model they have chosen – Phase 1, Phase 2 and Phase 3 – up to the satisfaction of it statutory accountant, ”said Atanu Bagchi, ex-CFO of Can Fin Homes. “A temporary top-up loan for such borrowers can save a lender from having to make high provisions, which can affect profitability.”

According to a recent report from Brickwork ratings, the provision for all overdue loans, but not yet NPAs, will affect the profitability of the crs area 36,000-72,000 in March and June quarters.

Why would a borrower prefer a top-up loan and not opt ​​for a moratorium? In both cases he must pay similar interest. Although we provide top-up loans in the home loan segment, we do not make any offers with the condition of opting out of moratorium, ”said a senior manager at one of the leading banks.

Auditors reportedly want lenders to provide more than 10%, depending on the quality of the asset.

“But NBFCs and HFCs that fall under Ind-AS may need to make more in line with the model they have chosen – Phase 1, Phase 2 and Phase 3 – up to the satisfaction of it statutory accountant, ”said Atanu Bagchi, ex-CFO of Can Fin Homes. “A temporary top-up loan for such borrowers can save a lender from having to make high provisions, which can affect profitability.”

According to a recent report from Brickwork ratings, the provision for all overdue loans, but not yet NPAs, will affect the profitability of the crs area 36,000-72,000 in March and June quarters.





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