Loan moratorium: Lenders struggling to track low-ticket retailers

Mumbai: Banks and shadow providers are having difficulty finding some of their customers, many of whom have been unable to pay their fees on time amid the current financial distress. Financiers across the spectrum are struggling to track low-cost lenders, about one-fifth of their customers, through virtual funds. Unless they can get hold of them, refunds are automatically postponed. the Reserve Bank of India You have announced a three-month moratorium on refunds to deal with the effects of the Covid-19 closure.

Agents are in search of borrowers who have taken out unsecured loans to buy phones and home appliances. Others have taken personal loans or have credit card debt.

Bajaj Finance, one of the largest financiers in consumer durable, said the “bounce” rate for consumer loans was 2.5 times the normal. The lender has already warned that criminal matters can rise 80-90% in the current shutdown.

“Most banks and NBFCs that have targeted loans based on algorithm Loans Without any real connection with the borrowers, there will be many problems, ”said a leading industry.

Bernstein sees 20% Bounce Rate

“We also face problems with our borrowers as collection agents cannot reach them. In some cases, there might be intent to pay but no ability to pay. So we buy time and try to contact them. We will have to see how this plays out when collection agents are able to reach these customers, ”the official said on condition of anonymity.

Bajaj Finance, Tata Capital, HDFC Bank, ICICI Bank, Shriram Capital, Axis Bank and L&T Finance did not answer ET’s questions. Gold loan NBFC (non-bank finance companies) Manappuram Finance said 10% of its customers could not be tracked.

“Collections in our commercial segment have dropped significantly – approx. 35% compared to over 90% before Covid-19 – because these vehicles are not capable of looting, ”said Manappuram Finance Managing Director VP Nandakumar. “The self-regulatory organization of Asirwad Microfinance (a Manappuram entity) has also made a decision to extend the moratorium to such customers.”

The CEO of another medium-sized NBFC said it could not reach a tenth of its borrowers.

“Depending on the product segment, we see 7-10% of customers who can’t be reached or who have already moved out of town during the shutdown,” the director said. “This probably explains why RBI has set a mandatory 10% provision for the non-standard cases that have chosen moratorium. But the real story only begins to unfold when the lock is lifted. ”

A report by Sanford C Bernstein said feedback from collection teams and agents suggests the original bounce rate of 20%. When employees fire staff and delay or reduce wages, the impact on the salaried segment is not yet played. ET previously reported that Axis Bank and Kotak Mahindra Bank had already cut credit card limits by over 50% and anticipated criminal acts.

Outstanding credit cards have tripled since the global financial crisis in 2008, while outstanding personal loans have increased five-fold. “Larger hit portfolios would be unsecured personal loans, consumer loans, loans from MFIs, especially in the city pockets of the migrant workforce,” said Atanu Bagchi, former finance director, Can Fin Homes.

According to an India Ratings study, microfinance institutions (MFIs) and small finance banks (SFBs) will face serious asset quality problems in the short term. MFIs are among the hardest hit in the initial period of lockdown, as their field staff cannot venture out for collections due to lockdown. “We work with clients who need moratorium and also operate the use of online banking and digital payment methods for those who can pay,” said Pramod Bhasin, founder, Clix Capital. “We also run a pilot on collections remotely.”

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