Recovery in Overdue Loan Accounts

Recovery in Overdue Loan Accounts

  • The chances of rising stress among non-banking financial companies has set the stage for a string of portfolio buyouts. We find that many of the Non-Banking financial companies (NBFCs) are looking at an outright portfolio sale for funding.
  • We observe there is reluctance from Bankers side to lend, and particularly private banks. We observe that there are offers by Oaktree Capital, Adani Properties, S C Lowy and Piramal Enterprises last week either to pick up Dewan Housing Finance Corporation’s entire book for ~28,000 crores, or choose from it, are not being seen as a one-off.

Here is a picture of the Collections made by NBFCs which is, of course, a Pre-Covid level detail

Collections made by NBFCs

Rising stress among NBFCs, and the difficulty faced by many of them in raising resources, possibly may force the hand of several players. Options like exiting a business segment, or focusing only on co-origination, or seeking formal partnerships (including consolidation with another player), are also being pursued as per reports available.

Here is a comparison of NBFC Vs. Banks after the moratorium.

Article on NBFCs V/s Bank

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