However, the non-bank lender is yet to finalise the contours of restructuring plan and expect the exercise to begin by October 2020.
The investor discussions mainly concerned two key areas demand revival in a post-Covid-19 world and asset quality outcomes post the moratorium and potential stress in the portfolio.
Mahindra & Mahindra Financial Services (Mahindra Finance) vice chairman and managing director (MD) Ramesh Iyer on Tuesday said only 4-5% of customers are likely to seek restructuring. However, the non-bank lender is yet to finalise the contours of restructuring plan and expect the exercise to begin by October 2020.
“We will consider restructuring for customers post October, subject to understanding of their requirement, future earning potential and their cash flow, ” Iyer said. The Reserve Bank of India (RBI) had allowed restructuring of personal and corporate loans impacted by Covid-19 with strict barriers, after moratorium facility expired in August, 2020. The central bank had earlier allowed repayment break for borrowers upto six months from March 1, 2020 in two phases.
Mahindra Finance said that 75% of borrowers opted for moratorium in the first phase between March to May, 2020. The number of borrowers opting for moratorium declined to around 30-32% in the second phase ended in August,2020. “Despite availing moratorium, more than 50% of customers were repaying installments,” Iyer said.
For customers who were under moratorium till August and were unable to make payment in September, Mahindra Finance will have a dialogue with them to asses the requirement.
“We want to find out how many customers have not been able to pay from September, because those are the customers who would need restructuring, “ he added.
Iyer also said that while the tractor segment had done well, taxi operators, tourist dependent vehichles, school bus operators would need longer to recover from the impact of Covid-19.
Mahindra Finance had earlier reported 129% year-on-year (y-o-y) increase in net profit to Rs 156 crore, compared to Rs 68 crore in the same quarter last year. The company attributed increase in net profit to cost rationalisation and reduction in overall cost of borrowing. The lender had raised Rs 3,089 crore through a rights issue in July, 2020.