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.