Synopsis
From an average default rate in collection efficiency at 2-3 per cent in pre-Covid times, non-banking finance companies (NBFCs) are now seeing 6-8 per cent of borrowers missing their payment schedules during the second wave of the pandemic. IIFL Finance has halted fresh disbursements for unsecured loans for micro-businesses & personal loans.
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The head of another NBFC in the wholesale lending business said, “Disbursement in Q1 is likely to be lower than that in Q4.
(This story originally appeared in on May 24, 2021)Hit with a drop in instalment collections due to the Covid-induced lockdowns across the country, non-bank lenders are slowing fresh disbursements and even halting them for unsecured loans.
NBFCs stop lending on fear of rising defaults
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NBFCs stop lending on fear of rising defaults
Mamtha Asokan / TNN / Updated: May 24, 2021, 11:17 IST
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CHENNAI: Hit with a drop in instalment collections due to the Covid-induced lockdowns across the country, non-bank lenders are slowing fresh disbursements and even halting them for unsecured loans.
From an average default rate in collection efficiency at 2-3% in pre-Covid times, non-banking finance companies (NBFCs) are now seeing 6-8% of borrowers missing their payment schedules during the second wave of the pandemic. IIFL Finance has halted fresh disbursements for unsecured loans for micro-businesses & personal loans.
Fitch Ratings has affirmed IIFL Finance Ltd s Long-Term Issuer Default Rating (IDR) at B+ , easing downside risk to the company s credit profile due to less adverse economic and funding conditions. The ratings agency also removed the rating from Rating Watch Negative (RWN). The outlook is stable. The ratings were placed on RWN in March 2020 and maintained on RWN at the last review in September 2020. India s economic recovery remains uneven, with lingering uncertainty around the path of the coronavirus pandemic. We expect reported asset quality metrics to deteriorate further as regulatory loan forbearance and economic support measures taper off. This includes a Supreme Court ruling delaying the recognition of new non-performing assets (NPA). Nonetheless, Fitch sees sufficient headroom at the current rating to absorb further downside risk, the ratings agency said.
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NEW DELHI: Around 2 stocks fell to touch their 52-week lows on NSE in Friday s session. Among the stocks that touched their 52-week lows on NSE were: Arvind Fashions and Globe Textiles (India). Domestic benchmark index NSE Nifty was trading 96.50 points up at 15271.3, while the BSE Sensex was trading 349.71 points up at 51629.22. On the other hand, Welspun India, Tata Power, Orchid Pharma ,
IIFL Finance and Intellect Design stocks hit their fresh 52-week high today.
In the Nifty 50 index, BPCL, Indian Oil Corp, Larsen & Toubro, JSW Steel and PowerGrid were among the top gainers on the NSE. However, Bajaj Auto, Hero MotoCorp, Maruti Suzuki, HDFC Life and SBI Life were among the top losers.
Should you go for IIFL Fin’s NCD issue offering 10.03% yield?
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According to experts, unsecured NCDs are much riskier than secured NCDs as the bonds are backed by the company’s assets
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IIFL Finance Ltd on Wednesday will launch a non-convertible debenture (NCD) issue of up to ₹1,000 crore, offering an effective yield of up to 10.03%. The issue is part of the company’s fundraising plan, under which it aims to raise up to ₹5,000 crore.
The latest issue of unsecured NCDs has a base size of ₹100 crore with a greenshoe option to retain oversubscription of up to ₹900 crore.