‘Loan collections by NBFCs improve, near Jan. levels’

Extensive recovery efforts by non-banking financial companies (NBFCs), coupled with the recent uptick in economic activity, has lifted the median collection efficiency ratios to their highest levels in FY21, and near pre-Covid-19 pandemic levels for most asset classes, Crisil Ratings said.

Its conclusions were based on the performance of its rated securitised pools for November 2020 payouts (October 2020 collections).

Collection of loan instalments had substantially reduced in the immediate aftermath of the stringent lockdown announced in late March 2020, and subsequently too, due to the extension of moratorium on loan repayment to borrowers, it said. Krishnan Sitaraman, senior director, Crisil Ratings, said, “Economic activity has been gathering steam in recent months, and agricultural activity, which was less impacted, has steadily picked up, too. As cash flows improved, borrowers have started repaying their loan instalments.”

Median collection ratios for November payouts for commercial vehicle loan pools jumped to 93% from a paltry 24% in May, compared with 98-99% in January-March. Collection efficiency for mortgage-backed loans were about 96% in October-November versus 99% in March and about 71% in June. However, pools backed by loans to SMEs saw a slight drop in November, as underlying businesses and borrower cash flows were yet to achieve stability, it said.