More than 50% of retail borrowers intend to seek restructuring: Survey

By: |
September 24, 2020 3:00 AM

The reason behind them opting for the moratorium was the fear of losing their jobs or a significant cut in salaries.

Of those who have already availed the moratorium, 70% said they would like their lenders to provide them some form of relief in their loan repayment.SIDBI is the nodal implementation agency for the interest subvention scheme for MSMEs.

More than half of the retail borrowers who participated in a recent survey said that they would opt for restructuring of their loans under the Covid-related stress resolution framework.

Another key finding of the survey by financial marketplace Paisabazaar is that a majority of borrowers who availed the moratorium did so out of a fear of losing their jobs, rather than an actual hit to their incomes.

Approximately 8,616 participants who had outstanding debt of over Rs 1 lakh responded to the survey.

They were in the age group of 24-57 years and the responses were registered from 37 cities.

55% of the customers responded that they would approach their lender to restructure their loan in some form to provide relief.

Many of them may not be eligible for recast, though, as their income has not been affected due to the coronavirus pandemic.

Of those who have already availed the moratorium, 70% said they would like their lenders to provide them some form of relief in their loan repayment.

Most customers want their loan tenure to be extended by up to six months only.

Among the findings of the survey was that while 53% of the salaried professionals availed the moratorium, over one-third (34%) of them did not suffer any impact on their salaries.

The reason behind them opting for the moratorium was the fear of losing their jobs or a significant cut in salaries.

This was in contrast with self-employed customers whose need to take the moratorium was more pressing, with 68% of such borrowers taking the moratorium. Of these, almost 98% saw a negative impact on their income since the outbreak of the pandemic.

Naveen Kukreja, CEO & co-founder, Paisabazaar.com, said that four aspects would shape the recovery of the lending industry — repayment behaviour, recovery in fintech lending, an economic revival and digitisation.

With the moratorium over, lenders are closely monitoring how existing customers who took the moratorium repay their EMIs.

The trends that emerge from here would significantly shape how lenders open the supply for new loans in the months ahead.

The pandemic has left many fintech lenders vulnerable, with their credit models now being put to test.

Their survival and the access to capital they get to lend to low-income segments would be critical to the overall recovery of the sector.

“If there’s steady recovery in the economy and incomes start getting restored steadily, we can expect supply of loans to be back to pre-Covid levels in seven-nine months,” Kukreja said, adding, “After the lockdown jolt, most players are now building the capability and infrastructure to make lending end-to-end digital.”

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