Banks are watchful on repayments by retail borrowers as collection efficiencies are yet to reach pre-Covid levels. With the loan moratorium ending on August 30 this year, a large number of retail borrowers have managed to make repayments, with banks reporting collection efficiencies at about 90 per cent of pre-Covid level.

However, there are worries about the remaining borrowers who have not been able to fully restart payments of their EMIs. A clearer picture is expected to emerge by the end of the month when the loan restructuring window will also end.

“Anywhere between 12 per cent to 15 per cent of customers would have gone through trouble in this period. Cheque bounce rates are elevated and collection efficiencies are still in the 90s,” noted a banker.

Salary cuts

In many instances, there have been salary cuts and the income of self-employed borrowers has not returned to the earlier levels.

Data from the National Payment Corporation of India also indicate stress among borrowers, with NACH bounce rates rising to about 41 per cent in November from about 31.4 per cent in February. NACH bounce rates remained elevated at about 40.1 per cent in October and 40.8 per cent in September.

“Banks are keeping a close tab on repayments. A large number of borrowers who had taken the moratorium have started repayments again, but they are yet to reach pre-Covid levels as at least some borrowers continue to face challenges related to income and salary. Banks are talking to such customers to understand the issues,” said a senior bank executive.

A recent report by S&P Global Ratings has cautioned that collection rates, which improved sharply in the second quarter to an average 95 per cent, may also wane. “This trend is aided by the pick-up in economic activity since lockdowns ended and, in many cases, by the financial savings of borrowers. Given that the overall economic activity levels remain soft, savings could deplete fast, potentially hurting future collection,” the report said.

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