NBFCs, HFCs saw an improvement across asset class in September: ICRA | Economic Times

Mumbai: Non-banking companies and housing finance companies were able to improve their collections this September amidst the economic impact of the Covid pandemic in the country, ICRA said Tuesday.The collection efficiency in ICRA-rated retail pools (originated largely by non-banking financial companies or NBFCs and Housing Finance Companies or HFCs) witnessed considerable improvement in September 2020 for almost all the asset classes, ICRA research said.The research said that many consumers also cleared their overdues and opted for pre-payments of their past dues.The improvement in collection can be attributed to sharper collection efforts of the lending institutions, ease in local restrictions, improvement in economic and business activity during July-September period and lower-than-estimated impact of the Covid-19 pandemic in rural and semi-urban areas eliminating further rounds of lockdowns/restrictions at least so far, ICRA said.“While the improvement in collections has been quite strong over the April to September period, the current collections (current month collection/current month billing) continue to remain below the pre-lockdown levels. Thus, a spike in delinquencies in softer buckets has been witnessed in September 2020 following the end of the moratorium in August 2020,” said Abhishek Dafria, Vice President and Head - Structured Finance Ratings at ICRA.ICRA report also noted that the entities and pools with strong collection teams, a better geographical spread, rural borrower base and borrowers involved in essential goods or business activities have seen a better recovery in collections and have been less impacted.