55% borrowers want to apply for loan restructuring: Survey

Scores have lost their jobs and many more have had their salaries reduced thanks to the economic impact of the novel coronavirus impact. It comes no surprise then that a Paisabazaar.com survey found that 55 per cent of its respondent would approach their lender to restructure their loans. Further, within those who have already availed the moratorium, 70 per cent of them said they would like their lenders to provide them some form of relief in their loan repayment.

8,616 participants responded to Paisabazaar.com's survey who had outstanding debt of over Rs 1 lakh in the age group of 24-57 years. The responses were registered from 37 cities.

Here is a look at more findings from the survey, Dealing with debt - How India plans to pay EMIs.

Impact on income
The survey found that 44 per cent of the salaried respondents claimed their salary has not been negatively impacted, another 30 per cent said their salary has been reduced by more than half from the pre-Covid levels. 12 per cent salaried customers reported complete loss of salary due to job loss.

With regards to those who are self-employed, 86 per cent said the pandemic has adversely impacted their income, 25 per cent claimed that their income has come down to zero. Of the 14 per cent of self-employed consumers who said their income has not been negatively impacted, a majority of them (over 90 per cent) were self-employed professionals like doctors and lawyers who had their own practice.

Chennai had the least income and repayment impact; NCR, Mumbai affected most
Delhi and the NCR cities were the most impacted cities with 70 per cent of their resident participants reporting a negative impact on income. Among these, 16 per cent of customers from the NCR also said their income has come down to zero due to the pandemic related disruptions.

In terms of percentage of customers who had a complete loss of income, Mumbai was the worst placed with 26 per cent Mumbaikars reporting income plummeting to nil.

Moratorium and loan restructuring
About 56 per cent of the survey’s respondents said they had availed the moratorium on their loans and/or credit card outstanding during this period. However, for the sake of being cautious, 23 per cent of those who availed moratorium had also reported they had no negative income disruption during this period.

"One of the key 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. A primary reason was fear of losing their job or a significant cut in salaries, and as a result, many decided to save more for an uncertain future, by taking the moratorium,"the survey found.

Though 44 per cent of the customers had not taken the moratorium, but a much larger number - 55 per cent - said they can afford to pay their loan EMIs and credit card bills each month hereon. "In fact, of the consumers, who had opted for the moratorium, 40% of them say they now have the repayment capacity to meet their monthly EMI obligations in full."

Interestingly, 51 per cent of the customers who have a monthly EMI obligation of Rs 25,000 or less took the moratorium. Hence, it was not surprising that more than 2 in 3 customers (68 per cent) whose EMI was in excess of Rs 1 lakh had opted for the moratorium.

On the other hand,22 per cent of consumers whose income though fell to zero due to the pandemic, did not opt for the moratorium.

Over a large section of the customers who participated in the survey said that they would like to approach their lender for a loan restructuring plan. About 55 per cent of the customers responded that they would approach their lender to restructure their loan in some form to provide relief.
Older borrowers are more financially stable
The survey showed the coronavirus pandemic has disrupted incomes across age brackets, from the young first-time salary earner to senior and experienced professionals who are not far away from the retirement age.
While the income impact was largely uniform across all age-groups, both among salaried and self-employed customers, data from the survey showed that there were lesser takers for the moratorium among those who are over 50 years of age (48% Vs Over 55% for every other younger age groups).