Several fintech firms have witnessed a drop in in loan collections during the second wave of COVID-19 pandemic. According to a survey, paybacks for overdue loans have been impacted by up to 20 per cent, as agents are unable to go into the field. The RBI announcement on loan restructuring has created confusion within the customer segment, the survey by a lobby group of the new-age lenders said.
Apart from the inability of the collection agents, the impact on repayment abilities at borrowers’ end because of genuine distress and medical emergencies was blamed for the dip in collections in the survey conducted by Fintech Association for Consumer Empowerment (FACE). It can be noted that many banks and non-bank lenders have also been reporting a dip in collections amid the second wave.
The survey of 100 companies by the lobby grouping said 69 per cent of its members are witnessing 10-20 per cent less collections in loans, which are overdue for between 31-90 days. Overall slowdown has been observed in collections recovery due to lesser field visits and in general, lower ability to pay, mainly coming from genuine distress and medical emergencies, the FACE survey said. Half of the members have said more than 80 per cent of their staff is working remotely.
However, the requests for delayed payment are significantly lower than the first wave, the survey said, adding that 87.5 per cent of the members reported lesser requests for delayed payments. This indicates that the phenomenon is temporary and should not have a long term impact on asset quality, it noted. The survey said the situation is better than last year, and most of the players expected the business to normalise by July 2021, while some aspects of the business are likely to be impacted for a longer period.
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From a disbursements perspective, more than half of the members have reported a dip from the pace that was witnessed in the March quarter. There has not been much of a change in risk and underwriting by the lenders, with 57 per cent reporting that their practices are unchanged, while 14 per cent have done minor tweaks.
On the second restructuring package front, the fintech firms feel the loan restructuring announcement has created confusion among the customers, and 56 per cent of the members said they expect to provide restructuring to less than 10 per cent of the borrowers.
(with PTI inputs)
