Second Covid-19 wave: NBFCs brace for defaults, grim business prospects

The collections are down as staff is not able to reach out to customers.

With falling collections in the second Covid wave and rising pressure on borrowers’ earnings, finance companies are staring at a rise in defaults and grim business prospects in the near term.
 
The situation is even more challenging for small finance firms and microfinance institutions (MFIs) — many of which are unrated.
 
They struggle to get funding support, while their borrowers hold back repayments to tide over the pandemic. The refinancing window (by financial institutions) needs a rehaul to facilitate access to them.
 
Karthik Srinivasan, group head-financial sector ratings, ICRA, said the collection, which had improved to move