Only 25% of NBFCs sought moratorium: CARE study

MUMBAI: They made headlines nationally that high-street lenders were not giving them the benefit of the repayments standstill. But in reality, just about a fourth of the 96 non-bank lenders analysed by CARE Ratings approached the banks for a moratorium.

More than four-fifths of the housing finance companies (HFCs) did not approach lenders for this relief. But more than 70% MFIs — and about a quarter of the realty-focused wholesale and retail NBFCs — sought relief, the research showed.

“HFCs are supported by relatively robust collections. Under moratorium also, many small and mid-sized HFCs are highly capitalised with high liquidity buffers, aiding them in the current scenario,” said the report. “The majority of microfinance companies have approached their lenders for relief given the meagre collections.” The banking regulator has allowed all lending institutions to allow a moratorium of six months on payments of instalments in respect of all term loans.

An analysis of the liquidity buffers held by non-bank lenders also showed that at least 54% of these NBFCs out of 56 companies were comfortably placed, with more three months of liquidity buffers. About 38% non-banks rated AAA have liquidity cover of more than 12 months. Strong NBFCs backed by strong corporate groups have favourable access to market funds, the analysts noted.

A look at the median collection for April threw up a worrisome picture. MFIs witnessed the lowest collection at 3%, largely because ground-level activities remained severely restricted. HFCs saw collection efficiencies fall to 50%, wholesale NBFCs registered 64% collections while retail NBFCs collected 51% of their dues. These numbers have improved significantly in May and June.

“AAA-rated NBFCs registered better median collections primarily driven by greater proportion of entities not extending moratorium, large HFCs reporting robust collections and wholesale NBFCs backed by the government of India,” the report said.