Domestic rating agency Icra on Monday said the monthly collections, including overdues in its rated retail loan pools originated largely by NBFCs and HFCs, have reached pre-moratorium levels as of December 2020.
However, for its rated microfinance players, collections are yet to reach the pre-moratorium levels.
In March last year, the Reserve Bank of India (RBI) had announced moratorium on repayment of term loans in order to provide relief to borrowers impacted by the COVID-19 related disruptions. Initially, the moratorium was allowed till May 31 but was later extended till August 31.
The agency in a report said the rebound in collections of retail loan pools originated largely by non-bank finance companies and housing finance players has been augmented by the focused recovery efforts, increased use of advanced digital platforms/payment gateways by borrowers.
The rebound in economic and business activities has also improved borrowers’ repayment capability, it said.
The monthly collection efficiency in the agency’s rated home loan (HL) and loan against property (LAP) pools demonstrated sturdy performance during the moratorium period.
Its rated CV and SME loan pools have also shown a steady recovery
in collections till December 2020 on account of deployment of additional resources and staffs towards collections along with adoption of new digital/IT technologies by the originators and rebound in business activities.
Icra’s Vice President and Head (structured finance ratings) Abhishek Dafria said despite the presence of prevalent challenges such as local political hindrances and natural calamities in the microfinance segment, the collections in ICRA-rated microfinance pools saw a healthy recovery after dipping to the lower single digits in April 2020.
However, the collections have yet not achieved the pre-moratorium level due to political interferences especially in North-Eastern states like Assam as well as recent floods in certain geographies.