Coronavirus lockdown | Company borrowings plunge 57.4%

India’s countrywide lockdown to tackle the coronavirus pandemic has hit company borrowings. It is evident as charge filings for March-April plunged 57.4 percent to 277, compared to 650 in January-February.

Charge filings (new loans or additional collateral for previous loans) from 17 lakh companies - tracked by the Ministry of Corporate Affairs (MCA) - were recorded by data provider Propstack, The Economic Times reported.

Even between March and April, the difference is stark as 272 loan charges were filed in March while only five filings were recorded till April 25. It further said that filings for loans ranging above Rs 50 crore fell 44 percent year-on-year (YoY) in the January-March quarter.

“Even though each charge filing is not equal to a new loan every time, the decline is significant to indicate that there is a decline in broader borrowing activity of medium and large corporates,” Sandeep Reddy, co-founder - Propstack noted.

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Non-banking finance companies (NBFCs), housing finance companies (HFCs) and units such as Shriram Transport Finance, Maharashtra State Electricity, Piramal Capital, PNB Housing IRFC and BSNL filed charges after bagging loans from banks.

Data from the Reserve Bank of India (RBI) showed credit growth of 6.1 percent till March-end – notably a 58-year low. ICRA said this decline was 64 percent till the period, the paper added.

A senior banker told ET it was a “double whammy” as the demand for credit is low due to uncertain economic activity. On the other hand, difficulties around physical verification/signing of documents has been a drawback for those looking for credit.

Besides this, banks’ credit, bonds, commercial papers (CPs) and outstanding for FY20 were Rs 6 lakh crore against Rs 16.8 lakh crore in FY19. Lending for FY20 from banks also fell to Rs 5.9 lakh crore, against Rs 11.9 lakh crore in FY19.