Collection efficiency in retail loan pools originated by non-bank lenders and housing finance companies reached pre-Covid levels, domestic rating agency said on Monday. The rebound in collections is being attributed to the focused recovery efforts by lenders, increased use of advance digital platforms by borrowers and the return in economic and business activities improving borrowers’ repayment capability.
The only source of concern remained the micro finance pool which is yet to reach pre-pandemic levels.
“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,” said Abhishek Dafria, Vice President and Head - Structured Finance Ratings at ICRA. “We believe that the recovery in collections of microfinance loan pools would be gradual in near term and would take some more time to achieve the pre-moratorium level.”
The monthly collection efficiency in the ICRA-rated home loan and loan against property pools registered swift recovery given lower-than-expected fresh slippages and continuation of strong collections. The commercial vehicle and SME loan pools have also shown a steady recovery in collections till December 2020 after lenders deployed additional staff towards collections along with adoption of digital means by originators.
With collections bouncing back to the pre-moratorium levels in most of the secured asset classes and businesses of non-bank lenders nearing their pre-moratorium levels, ICRA expects a rise in securitisation transactions.
The rating agency also flagged off rise in stress in the retail pool especially in loans which are 90 days past due. Due to the impact of the pandemic, loans due by more than 90 days showed a spike across asset classes in December 2020 when compared to the pre-moratorium levels.
“We expect the 90+dpd to be closer to the peak levels at present and then witness some reduction supported by the revival in the economy, assuming there are no further lockdowns in the country due to the pandemic,” said Mukund Upadhyay, Assistant Vice President, ICRA.
The only source of concern remained the micro finance pool which is yet to reach pre-pandemic levels.
“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,” said Abhishek Dafria, Vice President and Head - Structured Finance Ratings at ICRA. “We believe that the recovery in collections of microfinance loan pools would be gradual in near term and would take some more time to achieve the pre-moratorium level.”
The monthly collection efficiency in the ICRA-rated home loan and loan against property pools registered swift recovery given lower-than-expected fresh slippages and continuation of strong collections. The commercial vehicle and SME loan pools have also shown a steady recovery in collections till December 2020 after lenders deployed additional staff towards collections along with adoption of digital means by originators.
With collections bouncing back to the pre-moratorium levels in most of the secured asset classes and businesses of non-bank lenders nearing their pre-moratorium levels, ICRA expects a rise in securitisation transactions.
The rating agency also flagged off rise in stress in the retail pool especially in loans which are 90 days past due. Due to the impact of the pandemic, loans due by more than 90 days showed a spike across asset classes in December 2020 when compared to the pre-moratorium levels.
“We expect the 90+dpd to be closer to the peak levels at present and then witness some reduction supported by the revival in the economy, assuming there are no further lockdowns in the country due to the pandemic,” said Mukund Upadhyay, Assistant Vice President, ICRA.
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