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Home, auto loans are top segments for moratorium relief

Surabhi Mumbai | Updated on May 22, 2020 Published on May 22, 2020

Data with banks and NBFCs show moratorium taken taken by retail borrowers

Even as the Reserve Bank of India’s announced extension of the moratorium on term loans by another three months till August 31, industry data reveals that auto and home loans are major segments where retail borrowers have been availing of the facility.

Data with leading banks and non-banking finance companies show that retail borrowers and small businesses have also been availing the facility for farm and consumer loans as well as outstanding credit card loans.

Data with Bajaj Finance revealed that as much as 70 per cent of its assets under management in the auto finance business was under moratorium as on April 30, 2020. This was followed by 30 per cent each of the AUM under rural business to business and SME business under moratorium.

Significantly, its consumer B2C business, which has the largest AUM of ₹30,500 crore had 29 per cent of the funds under moratorium.

L&T Financial Services reported that 32 per cent of its borrowers who had taken consumer loans had availed of the Moratorium as on March 31, 2020 followed by 31 per cent of borrowers who had taken a farm loan. As much as 29 per cent of the borrowers who had taken a two-wheeler loan also availed of the moratorium.

Ramesh Iyer, Vice Chairman and Managing Director of Mahindra and Mahindra Financial Services Ltd said that other than farm and the local small traders, about 75 per cent of its total customers had taken the moratorium.

“The moratorium has not allowed to certain delinquent customers. It was available for customers in 0, 1 and 2 buckets, of which about 70 per cent to 75 per cent have taken the moratorium,” he told BusinessLine.

Bankers have reported that many retail customers opted for the moratorium out of caution to conserve cash flows in segments like housing loan and even credit cards.

“The commentary on customers seeking moratorium in retail and corporates and SME varied considerably across banks. Though we sense broadly 25 per cent to 30 per cent of loans (in value) are under moratorium in April and would have gone up further by another 5 percentage points to 10 percentage points in May,” ICICI Securities had said in a recent research note based on fourth quarter results of private sector banks.

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Published on May 22, 2020
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