NBFCS’ STRESSED LOANS TO RISE TO ₹1.5-1.8 L-CR IN FY21, SAYS CRISIL
MUMBAI: Stressed assets of Indian non-bank financiers and mortgage lenders are expected to touch ₹1.5-1.8 lakh crore, or 6-7.5% of their total assets under management (AUM) by the end of FY21, with covid-19 affecting almost all their asset classes, rating agency Crisil said on Tuesday.
Crisil, however, said the onetime covid restructuring window for micro, small and medium enterprises and other sectors offered by RBI will limit the reported gross non-performing assets.
Unlike previous crises, it said, current challenges on account of the pandemic impacted almost all non-banking financial companies’ (NBFC) asset segments. Operations of these lenders were disrupted the most in the June quarter, when disbursements and collections were severely hit by the hard-braking of economic activity.
While collection efficiency has improved since then, it is still some way off pre-covid levels for small businesses, and the unsecured and wholesale segments, given the volatility in borrower cash flows, Crisil said.
Krishnan Sitaraman, senior director, Crisil Ratings, said FY21 has brought unprecedented challenges to the fore for NBFCs. “Collection efficiencies, after deteriorating sharply, have now improved, but are still not at prepandemic levels. There is a marked increase in overdues across certain segments and players. Nevertheless, gold loans and home loans should stay resilient,” said Sitaraman.
NBFCs have been plagued by a liquidity crunch since the defaults at Infrastructure Leasing and Financial Services (IL&FS) in September 2018. Covid aggravated their woes, considering that while their borrowers sought debt recast, NBFCs were not eligible to get their borrowings restructured.
Only recently has RBI allowed NBFCs to avail funds raised by banks under the on-tap targeted long-term repo scheme, which was first announced in October.