NBFCs Take Maximum Brunt Due to STPL Segment Delinquencies

The small ticket personal loans (STPL) sector records a significant dip in the asset quality stress concerning lenders in FY21. Non-bank finance companies (NBFCs) are being subjected to the maximum brunt.

As per stats, the delinquency levels for unpaid loans between 30 and 180 days increased to 12.7% as of March 2021. A year ago, it stood at 8.2%, and towards the end of March 2019, it was only 4%.

With the onset of the COVID-19 pandemic, concerns were raised amidst the personal loan portfolios due to the impact in the income generation in a fiscal year that witnessed an economic contract by 7.3 %. Initially, the regulator responded by introducing a moratorium and then placed a restructuring mechanism concerning small-ticket lending.

On the STPL, the delinquency levels of NBFCs’ stood at 14.8%, followed by 5.6% concerning private sector banks. The state-run lenders’ ratio on the STPL stood at just 1.5%. The overall portfolio (outstanding) stood at Rs 13,600 crore, with around 1.46 crore active loans as of March 2021. 

STPL recorded originations worth Rs 13,500 crore by value and 1.48 crore accounts in terms of volume with an average ticket size of Rs 9,100 in FY21. There has been a decline of 42% in the average ticket size of STPL in FY21 compared to FY19.

When observed from an asset quality point of view, the housing loan segment recorded a dip in delinquencies to 3.2% along with business loans (currently down to 6.9%). Other segments such as consumer durables, commercial vehicles and two-wheeler loans showed an increase.

People under 25 years of age or between 26 and 35 form the bulk STPL, two-wheeler and durable consumer loans. Older people brought other loans such as business loans, commercial vehicles and housing loans.

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For any clarifications/feedback on the topic, please contact the writer at bhavana.pn@cleartax.in

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