Wednesday, June 19, 2024
Home > Finance News > Improving collections at NBFCs, small lenders signal a pickup

Improving collections at NBFCs, small lenders signal a pickup


Mumbai: Collection efficiency for most non-bank lenders, small finance banks and microfinance institutions (MFIs) has improved in June to 50-60% of the levels seen before the lockdown, from as low as 20% in April.

Collections were the highest in asset-backed securities and non-MFI loans at nearly 70%, followed by mortgage-backed loans at 60% and small-ticket borrowing at about 50%.

Magma Housing Finance said it witnessed strong resurgence in June collections, which more than doubled from May. The mortgage lender collected over ₹400 crore in June.

“Since most of our customers are in peri-urban, semi-urban and rural markets where the agrarian economy is playing out well or business resumption is well initiated, we expect collections to get stronger in ensuing quarters,” chief executive Manish Jaiswal said. “The customers under moratorium have sharply fallen by almost 40% and overall, we now expect nearly 30% customers under moratorium at the end of June.”

Suryoday Small Finance Bank also saw its collection efficiency improve to nearly 70% in mortgage and small businesses loans, and 50% in the micro category as against 15% in May.

“For the months of April and May, we were seeing borrowers wanting to conserve cash. Now, with unlock into effect and businesses opening up, customers don’t want to add the extra burden of higher interest and are wanting to pay up,” managing director R Baskar Babu said.

Private lender Bandhan Bank said its collection efficiencies had improved significantly, leading to a fall in moratorium levels. Collection efficiencies improved to 70% as on July 3 for its micro-banking vertical. For non-micro banking advances, it was 84% at the end of June.

Indiabulls Housing Finance saw collections at nearly 60% of the instalments it collected in February. Prior to Covid-19, it had collected over ₹1,000 crore a month in loan repayments.

Improving Collections at NBFCs, Small Lenders Signal a Pickup

Equitas Holdings initiated its field staff meetings in June and recorded that nearly 44% of its centres were collecting payments. Micro lender Satin Creditcare recorded June collection efficiency at 60%.

“Due to the lockdown, collection activities of all financiers were impacted significantly due to logistical and operational challenges,” said Abhishek Dafria, a vice president at ratings firm Icra. “We expect collections to witness a steady improvement, though the pace of recovery in economic activity will remain important and any reversal in the easing of lockdown will be a negative.”

While improvement in collection efficiency was a positive sign, a few experts sounded a note of caution and said normalisation could take a couple of quarters, and collections would take a few more months to reach pre-Covid levels.

“Our channel checks with multiple collection agencies reaffirm our thesis that the current crisis is far more severe than the demonetisation and the 2008 global financial crisis,” said Jignesh Shial, a research analyst at Emkay Global.


Source link

Leave a Reply

Your email address will not be published. Required fields are marked *