India’s non-bank lenders are bracing for a big flood of delinquencies from micro, small and medium enterprises (MSMEs), the worst hit by the pandemic.
The wariness still lingers despite improvement in repayment collections in the past two months. Lenders believe this to be a temporary relief.
The collection efficiencies of non-bank lenders have seen an improvement even for vulnerable segments such as MSMEs and microfinance. Analysts at Crisil Ltd estimate that collection efficiencies were 65-70% of pre-pandemic levels in August for MSMEs and microfinance. In comparison, collection efficiencies were 25-30% during the lockdown months of April and May, and around 55-60% in June and July.
“Businesses in big cities are still impacted, but in many areas, they are back in business. We have seen improvement in our collections,” said Rajesh Sharma, managing director at Capri Global Capital Ltd, a non-bank lender catering mainly to