Tag: loan disbursements

Mudra loan ratio trebles to 20% during pandemic as stress hits small businesses, BFSI News, ET BFSI

Banking & Finance

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A man displays new 2000 Indian rupee banknotes after withdrawing them from a State Bank of India (SBI) branch in Kolkata, India, November 10, 2016. REUTERS/Rupak De Chowdhuri/Files

Gross NPAs in the Mudra loan book is estimated to have reached around 20 per cent at June-end 2021, from around 6 per cent at March-end 2020.

As the stress builds up in the economy due to pandemic, lenders are seeing a sharp uptick in NPAs in Mudra loans, which have trebled in June 2021 over the pre-Covid fiscal of 2019-20.

Gross NPAs in the Mudra loan book is estimated to have reached around 20 per cent at June-end 2021, from around 6 per cent at March-end 2020.

In Maharashtra, public sector banks’ Mudra loan NPAs have risen to 32 per cent at June-end 2021, from 26 per cent at June-end 2020.

SBI’s NPA on Mudra loans in the state is at 59 per cent as on June-end 2021 followed by Punjab National Bank at 44 per cent, Indian Bank at 33 per cent and Bank of Maharashtra at 31 per cent at June-end 2021.

In Jharkahnd, Canara Bank Mudra NPAs as high as 114.35 per cent as bad loans were Rs 183.63 crore against the outstanding amount of loans at Rs 160.58 crore.

Among private sector banks, HDFC Bank’s Mudra loan NPA in Jharkhand was at 26.21 per cent, followed by IDFC First Bank at 24.93 per cent.

The Credit Guarantee Fund for Micro Units (CGFMU) provides guarantee against loan losses in Mudra loans, but 75 per cent of NPAs in Mudra loans, while the rest of losses have to be borne by the banks.

Loan losses

Public sector banks (PSBs) have seen a sharp surge in the amount of Mudra loans turning into non-performing assets (NPAs) over the last three years. NPAs in Mudra loans had jumped to Rs 18,835 crore in 2019-20, from Rs 11,483 crore in 2018-19 and Rs 7,277 in 2017-18, according to the Finance Ministry data.

Mudra loan disbursements by state-owned banks rose to Rs 3.82 lakh crore in 2019-20, from Rs 3.05 lakh crore in 2018-19 and Rs 2.12 lakh crore in 2017-18. The Mudra loan NPAs as a percentage of total loans rose to 4.92 per cent in 2019-20 from 3.42 per cent in 2017-18.

Banks and financial institutions have sanctioned Rs 14.96 lakh crore to over 28.68 crore beneficiaries in the last six years. The average ticket size of the loans is about Rs 52,000, it said.

Under PMMY collateral-free loans of up to ₹10 Lakh are extended by Member Lending Institutions (MLIs) viz Scheduled Commercial Banks, Regional Rural Banks (RRBs), Small Finance Banks (SFBs), Non-Banking Financial Companies (NBFCs), Micro Finance Institutions (MFIs) etc.

The scheme

Under the scheme, credit up to Rs 10 lakh is provided by banks and non-banking financial companies to small and new businesses.

The loans are given for income generating activities in manufacturing, trading and services sectors and for activities allied to agriculture.

The government has sanctioned loans of Rs 15.5 lakh crore under PMMY since its inception in April 2015.

Till March 31, 2021, the Government had sanctioned 29.55 crore loans under the scheme. Of this more than 6.8 crore loans worth Rs 5.2 lakh crores have been given to new entrepreneurs.

For FY22, loans worth Rs 3,804 crore have been sanctioned by 13 public sector banks (PSBs) as on June 25.



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About 45% fintech lenders see no impact of Covid-19 second wave on loan disbursements: FACE Survey

Banking & Finance

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About 45 per cent of fintech and digital lenders did not witness any significant impact on business during the second wave of the Covid-19 pandemic, according to a new survey.

In fact, they continued to disburse loans at the same or higher levels as they did in the fourth quarter of 2021, it revealed.

The survey by Fintech Association for Consumer Empowerment (FACE) of over 100 members revealed that 56.3 per cent of respondents continued to disburse loans in the second wave of the pandemic but did so cautiously and selectively.

Also read: Fintech start-up Boxop ties up with Mahindra Insurance for Covid treatment

About 31.3 per cent of the respondents disbursed loans at the same rate as that of pre- Covid levels while 12.5 per cent were disbursing loans at higher levels that the January-to-March 2021 quarter.

“Members with large customer-base have observed lesser impact on disbursement business continued to provide support,” the survey revealed, adding that members involved in lending to self-employed customers have seen some impact on lending linked to business closures for significant period.

Loan restructuring

“The study was conducted to understand the impact of Covid-19 second wave on digital lending business and fintech industry. The report highlights that how the Covid-19 outbreak and moratorium announcement by RBI has led to uncertainties in the lending business; however, the impact of pandemic on the digital lending business was less severe than compared to the last wave,” said a statement on Friday.

The survey also revealed that about 56 per cent of the members expect to provide loan restructuring to 10 per cent or less of the customers.

In terms of collections, about 69 per cent of the respondents said they see 10 per cent to 20 per cent less collections in the 31-60 day overdue bucket and 61-90 day overdue bucket.

The respondents had retrained their underwriting models after the initial wave of Covid-19 since these models continued to perform well during the second wave. The survey claims that 57.1 per cent of the respondents prefer using the underwriting model that was used during the first wave.

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HDFC sees ‘robust’ growth in individual loan disbursements

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Housing Development Finance Corporation Ltd (HDFC) reported a 26 per cent increase in individual loan disbursements.

“The individual loan business continued to see improvements during the quarter ended December 31, 2020. Disbursement growth over the corresponding quarter of the previous year was 26 per cent,” said HDFC in a regulatory filing on provisional numbers for the third quarter of the fiscal.

For the nine months ended December 31, 2020, individual loan disbursements stood at 86 per cent of the levels in the corresponding period of the previous year, it further said.

“During the quarter ended December 31, 2020…the Corporation assigned loans to HDFC Bank amounting to ₹7,076 crore, compared to ₹4,258 crore in the corresponding quarter of the previous year,” it further said.

Gross income from dividend for the quarter ended December 31, 2020, was ₹2 crore, compared to ₹4 crore in the corresponding period last fiscal.

During the quarter ended December 31, 2020, the profit on sale of investments was ₹157 crore, HDFC further said.

“This was on account of the sale of 25,48,750 equity shares of HDFC Life Insurance. The Corporation’s shareholding in HDFC Life now stands at 49.99 per cent. This has met the RBI’s mandate of reducing the Corporation’s shareholding in HDFC Life to 50 per cent or below by December 16, 2020,” it said, adding that for the purpose of consolidated financial results under IndAS, however, HDFC Life shall continue to be accounted as a subsidiary.

On Tuesday, HDFC’s scrip closed at a gain of 2.78 per cent at ₹2,651.15 apiece on the BSE.

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