Concerns over the quality of retail loans have increased again due to the increasing cases of Corona. Investment-related information firm Iqra has said that the quality of loans disbursed, especially by non-banking finance companies (NBFCs) and housing finance companies (HFCs), may be affected. In a report, Iqra says that due to restrictions on movement, there will be a huge impact on the recovery of NBFCs which are of very small amounts and in which cash transactions are still very high.
According to Iqra, if the movement between states is stopped again, the pressure on commercial vehicle loans may also be seen. The movement of non-essential items has been stopped in many other areas including Maharashtra and Delhi. As such, companies operating commercial vehicles are not able to utilize their full potential. This may also affect the quality of commercial vehicle loans.
However, the agency believes that even in this challenging period, the housing loan sector is going to be the most vibrant, as was shown in such a turbulent environment last year. The reason for this is that it is considered a secured loan and customers also prefer to repay it.
Abhishek Dafaria, vice president and head of structured finance ratings at Iqra, said that currently all restrictions are limited to the local level and not as difficult. But the intensity of the corona is becoming increasingly frightening as it is yet to be brought under control.
In the first quarter of the last financial year ie April-June, 2020, the securities volume fell to Rs 7,500 crore. The reason for this was that the central government imposed a nationwide lockdown in the fourth week of March. However, it saw a spurt since the lockdown exemption and reached Rs 40,000 crore in the last quarter of the last financial year i.e. January-March 2021.
Iqra believes that in this second wave of Corona, securities volume may again see a sharp drop. The reason for this is that NBFCs and HFCs will give loans very thoughtfully and carefully.
Oxygen deficiency affects loans in five areas
Global company Crisil of the analysis sector has said that the lack of industrial oxygen may cause the worst impact on the five sectors. These include metal fabrication, auto components, ship breaking, the business of breaking lifesaving water vessels, paper, and engineering.
Crisil Rating director Gautam Shahi said that the business of small companies in these sectors may be affected at the moment. By the way, Crisil said that in this era of crisis, protecting human life is more important. Despite this, it is true that the shutdown of industrial oxygen supply will affect the business in some areas. It is noteworthy that in the second week of April amidst the second wave of the corona, the demand for medical oxygen has increased almost five times.
Also Read: INDIA NOT COLLECTING FOREIGN CURRENCY, CENTRAL BANK’S LINKED ACTIVITIES BALANCED: COMMERCE SECRETARY
