The second wave of the Covid-19 pandemic may not be as devastating for financial technology (fintech) firms as the first wave, revealed survey of top 20 firms by the Fintech Association for Consumer Empowerment (FACE).
"It is interesting to note that the Covid-19 impact is different this time, compared to the same situation last year. While most players expected business to normalise by July, some aspects of the business are expected to be impacted for a longer period,” stated the online survey, taken by 100 senior executives of the top 20 fintech firms.
These 20 firms combined serve 6.5-million-plus customers, of which 46 per cent are ‘new to credit’ customers.
However, the lockdown, alongside the moratorium announcement by the Reserve Bank of India (RBI), has "led to a lot of uncertainties in the lending business”, it observed.
“Digital lenders also borrow from debt markets, primarily from banks. It will defeat the purpose if those ‘lender of lenders’ look negatively at Covid-based relief (if any) provided by digital lenders, even if the collections don’t suffer or non-performing assets are provided for," said Srinath Sridharan, member of governance council, FACE. He said if there was a regulator-provided framework for Covid relief, the "randomness or subjectivity of any such decision could have been avoided”.
The RBI on May 5 had said individuals and small businesses (with exposure up to Rs 25 crore) that did not avail of the moratorium in 2020 can do so now for two years, should they need it. Besides those who did not receive restructuring for two years may now extend their payments up to two years of the original plan.
This year, according to the survey, the fintech players have been conservative on providing moratorium to customers. Around 56 per cent of FACE members in the survey expect to provide loan restructuring to 10 per cent customers, it said.
Interestingly, disbursements continued as usual in this wave. Last year during lockdown, many firms had refrained from paying out money. Around 45 per cent of the respondents, particularly those with a large customer base, observed lesser impact on disbursement because repeat business continued to provide support.
“This time, employers were prepared. Paycuts have not been majorly observed so far. However, members involved in lending to self-employed customers have seen some impact on lending linked to business closures for a significant period,” it sated.
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