Home >Industry >Banking >NBFC, HFC's securitized pools see rise in collection efficiency: Icra

MUMBAI : The collection efficiency in Icra-rated securitized pools originated by non-bank financiers and housing finance companies witnessed a continued rebound in July, the rating agency said.

This was on account of focused collection activities by lenders and supported by the receding movement restrictions or lockdowns subsequent to reduced impact of the second wave of covid-19 pandemic, it said. Consequently, the incremental slippages in the softer and harder buckets have seen a decline. Further, the focused collection efforts of the lending institutions and improvement in broader business activities in August 2021 are expected to continue to support the improvement in collections in the future as well, it added.

According to the rating agency, while housing loans and loans against property (LAP) remained the least impacted and were quick to recover to the March 2021 levels; the monthly collections in commercial vehicle loans, small businesses and microfinance loans also rebounded quickly to over 90% levels in July 2021 from the lows seen in May 2021. Resultantly, the incremental slippages have also reduced in June and July 2021 leading to submerging of asset quality concerns in the ICRA-rated pools.

Abhishek Dafria, vice-president and head (structured finance ratings) at Icra said, the monthly collection efficiencies of Icra-rated securitized pools across asset classes have been on an improving trajectory following the ebbing of the second wave of pandemic since June 2021.

“We do not foresee any immediate decline in the collection efficiencies of the retail pools. While the threat of another wave of covid-19 infections remains, we expect that the past experience would make the state and central governments as well as the companies better equipped to handle such an event so as to ensure least disruption to economic activities," said Dafria.

The improvement in vaccination coverage would be a positive for the sector as entities are aiming to get their employees fully vaccinated soon which would give the collection teams more confidence and reduce the risks when stepping out on a more regular basis, said Dafria.

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