Collections for pools of retail-loan receivables making a recovery

The collection performance of securitised pools of retail-loan receivables has been improving over the past three months, from the lows of April. According to CRISIL Ratings, collections for pools of microfinance and commercial vehicle loan receivables (which had seen the sharpest drop after the lockdown), clawed back above 50 per cent in July, and reached 65 per cent and 55 per cent in August, respectively.

 

Mortgage receivables, with property as collateral, were the most resilient, with a median collection ratio of over 70 per cent, despite a dip in July. Non-banking financial companies (NBFCs), many of which were dependent on cash collected by their field staff, sharpened their focus on digital modes of collections. Additionally, many NBFCs now offer a wider array of payment channels to ensure that physical distances do not materially impede collections.