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Business EconomyPosted at: Sep 30 2020 7:52PM


Navigating post moratorium asset quality to be key differentiator for lenders: ICRA

Mumbai, Sep 30 (UNI) ICRA Ratings said on Wednesday that the ability of lenders (banks & non-banks) to maintain and further improve upon the collection efficiencies in the coming months would remain a key monitorable and entities which are able to better navigate these times would be able to differentiate themselves from peers.
Lenders are back to the normal demand of their dues from their borrowers from September 2020, subsequent to the closure of the moratorium window in August 2020 and collection efficiencies are estimated to have registered a jump in the month post the slackening witnessed in July and August, after the spike in June.
This expectation is also attributed to the phenomenon of higher quarter-end collections, a trend prevalent even in the pre-covid era and, as some borrowers who had availed the full moratorium benefit have started repaying.

Giving further insights, Karthik Srinivasan, group head (Financial Sector Ratings) at ICRA, said, “Given the improving CE trend, it is estimated that the share of asset under management (AUM) having not paid any dues between April and August 2020 stood at about 20 per cent for non-banks as of August 2020, while those for banks is estimated at 5-10 per cent across various banks. Considering the above and expected recoveries going forward, ICRA believes that the eligible portfolio, which can be restructured to be about 5-10 per cent of the AUM for non-banks and 5-8 per cent for banks. Lenders are still formalising the restructuring policies and process and are expected to roll-out the same in the first few weeks of October 2020.”
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