Non-banks’ NPAs may rise to 4.5-5 per cent by March 2022: Icra

Restrictions in movements imposed by various states are likely to impact collections of Non Banking Financial Company (NBFCs) and housing finance companies (HFCs), which may see NPAs rising to 4.5 – 5 per cent by March 2022, says a report. Icra rating said non-banks will feel the stress of the second wave of covid and movement restrictions imposed by various states in April-May 2021, given the fact that 25-30 per cent of their loan collections happen through field collection teams and largely via cash.

We meet expect the non-bank reported NPAs to increase to about 4.5-5 per cent by March 2022 vis a vis about 4 per cent in December 2020.
Loan collections by non-banks, which were impacted by the nation-wide lockdown and the loan moratorium till August 2020, saw a steady revival during the third and fourth quarters of FY2021, the agency said.
Non-banks with higher share of field-based collections are more adversely impacted; typically, entities focusing on borrowers with limited banking habits, rural borrowers and smaller loan tickets (non-digital loans) have a higher share of their collections from field operations, she added. The agency said within non-banks, the share of field collections are higher for NBFCs at about 35-40 per cent, while the same for HFCs is about 5-10 per cent.

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