Retail asset quality concerns re-emerge as cases surge: ICRA
The Hindu
‘If COVID case severity increases, microfinance, unsecured SME loans will be hit’
With fresh COVID-19 related restrictions in place, microfinance and unsecured SME loan pools would likely face the most stress if case severity increases, ICRA said in a report. However, housing loans would remain the most resilient as was seen even last year, it added. “The restrictions on movement would have a bearing on collection efforts for the NBFCs, especially for microfinance loans where cash collections still remain dominant. Commercial vehicle loans could also face stress if the inter-State restrictions are reimposed, though even the current restrictions put in place in Maharashtra and Delhi would lead to lower fleet utilisation for the operators,” ICRA said in the report. Abhishek Dafria, VP and head, Structured Finance Ratings, ICRA, said, “While it is too early to comment on the extent of impact on the asset quality of retail loans due to the rising COVID cases, there is reason to be cautious.” “Post the nationwide lockdown last year, we had witnessed a severe drop in collections for most asset classes... The restrictions at present are localised and less harsh, but the severity has been gradually increasing as the surge in COVID cases is yet to be brought under control,” he said.More Related News