As Covid cases surge, microfinance industry wary of the impact on its collection efficiency
April 08, 2021
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Disbursements to new customers may also be impacted if field operations are affected due to increase in restrictions in certain regions
The microfinance industry, which has been inching towards pre-Covid levels – both in terms of disbursements as well as quality of portfolio – now seems a little wary of the impact of the sudden surge in Covid-19 cases on its collection efficiency.
Any impact on collections may also hurt growth in disbursements, as fresh loans to existing customers will only be sanctioned as and when they foreclose the previous loan.
Banks may face a sharp surge in bad loans in FY22: ICRA
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The ratings firm, expects, loan restructuring at 1.3-1.5% of the advances, much lower than its initial estimates. Despite the impact of Covid-19 pandemic on debt servicing ability of borrowers, the gross fresh slippages for banks stood much lower at Rs 1.8 lakh crore at the web of December 2020, as compared to Rs. 3.6 lakh crore same time the year prior.
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Gross bad loans were at 8.6% as on March 2020 and 8.3% (proforma basis) at the end of December 2020.
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Bad loans of Indian banks could rise significantly in the current fiscal year as government and the Reserve Bank of India rollback regulatory and fiscal support measures, according to domestic rating agency ICRA. Banks could see gross bad loans rise to 9.7% at the end of the fiscal year March 2021 and 10.2% by the end of fiscal year 2022,
Banks asset quality remains monitorable despite lower increase in NPAs: ICRA ANI | Updated: Apr 06, 2021 15:06 IST
Even including pro-forma GNPAs of Rs 1.3 lakh crore (1.1 per cent of gross advances) and NNPAs of Rs 1 lakh crore (1 per cent of net advances), the GNPA and NNPA of banks stood at 8.3 per cent and 2.7 per cent as on December 31, 2020 as compared to 8.6 per cent and 3 per cent respectively as on March 31, 2020.
However, this decline was driven by loan write-offs of Rs 1.1 lakh crore (1 per cent of advances) during 9M FY21.
Further, based on the restructuring guidance given by various banks, the overall volume of restructured advances is estimated at 1.3 to 1.5 per cent of the advances, much lower than ICRA s initial estimates.
Banks’ GNPAs to rise to 9.6-9.7% by FYE21 and 9.9-10.2% by FYE22: ICRA
April 05, 2021
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Credit rating agency ICRA expects Banks’ Gross Non-Performing Assets (excluding write-offs) to rise to 9.6-9.7 per cent by March 31, 2021 and 9.9-10.2 per cent by March 31, 2022 from 8.6 per cent as on March 31, 2020 as the impact of various Covid-19 pandemic related relief measures wanes off.
As the impact of various relief measures such as moratorium on loan repayment, standstill on asset classification and liquidity extended to borrowers under Guaranteed emergency credit line (GECL) wanes off, the asset quality pressures are likely to resurface, the agency said.
In a note, ICRA observed that despite the impact of Covid-19 pandemic on debt servicing ability of borrowers, the gross fresh slippages for banks stood much lower at ₹1.8 lakh crore (2.7 per cent of advances on annualised basis) during 9M (nine months) FY2021 as compared to ₹3.6 lakh crore (4.1 per cent) during FY2020. Thi
Banks see improvement in solvency profile in FY21
April 05, 2021
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Banks’ solvency position is relatively better, thereby providing some comfort to their loss-absorption abilities, according to ICRA.
Capital raise, coupled with lower Net Non-Performing Assets (NNPAs), resulted in an improvement in solvency profile for banks during FY21, the agency said in a note.
ICRA noted that public sector banks raised ₹12,000 crore (0.2 per cent of risk weighted assets – RWAs) and private sector banks raised ₹53,600 crore (1.3 per cent of RWAs) of equity capital from market sources during FY21.
In addition, the government also infused ₹20,000 crore (0.3 per cent of RWA) into the public sector banks as part of its budgeted recapitalisation for FY21.