MUMBAI : Widespread job losses and wage cuts, especially in urban centres, have left lenders worried about unsecured retail loan portfolios once the moratorium on debt repayments ends on 31 August.
Senior bankers said there are tell-tale signs that non-performing retail loans will spike.
On Thursday, State Bank of India chairman Rajnish Kumar said the bank is readying to deal with a higher volume of personal loan requests after the moratorium ends on Monday. Kumar said he does not expect many debt recast requests from large firms as most large stressed assets have already gone through several rounds of clean-up.
RBI’s recent financial stability report showed the number of retail and small businesses that had availed of the moratorium was much higher than such requests from corporate borrowers as on 30 April. The data also showed state-run banks, small finance banks and non-banking financial companies had reported a higher proportion of retail loans under moratorium than private sector banks and foreign banks. State-run banks saw nearly 80% of their retail borrowers availing of the moratorium as compared to 73.2% in the case of small finance banks and 45.9% in the case of non-banking financial companies. To be sure, these numbers have come down over the past six months.
Bankers agree loans to borrowers such as house helps, drivers and textile weavers will require restructuring as their work has been impacted by the pandemic.
Click here to read the Mint ePaperLivemint.com is now on Telegram. Join Livemint channel in your Telegram and stay updated
