There are no free lunches in banking. Borrowers - be it home loan, a car loan or corporate borrower - must not just pay interest for availing the moratorium once EMIs resume, they also risk getting tagged as 'high risk' customers when applying for fresh loans. Availing moratorium is not supposed to affect credit score of a borrower, but the 'borrowers with moratorium' record is enough for banks to turn down such customers in future.
"The very fact that a customer has taken the benefit of six months moratorium shows that there is some problem of cash flows or they are anticipating a mismatch in future cash flows. The loan moratorium actually pushes the liability of a customer," says a senior official of a credit bureau.
Currently, the banks use credit data of TransUnion CIBIL, Experian, Equifax and CRIF Highmark before offering any loans. But since the moratorium does not affect credit score, banks will be looking more specifically for the moratorium record. The six month moratorium will quite clearly increase the indebtedness of borrowers. Given the bleak economic growth scenario, creditworthiness of such borrowers is more likely to slip in future. Such customers might approach banks for unsecured loans, especially personal loans and credit cards.
Unfortunately, lending in the current environment is risky for banks. So, they are certain to look into moratorium data before committing any short term loans. The credit bureaus can easily segregate the data of customers who have taken the loan moratorium. In fact, banks are in touch with credit bureaus for analysing their existing customer data to better manage future defaults. The credit bureaus are also working on various products for banks by segregating geographies (red or green zones), customer age profile, the default or delayed payment history.
The risks emerging from the EMI moratorium are high because lot of borrowers are availing the facility. The Reserve Bank of India (RBI) has estimated moratorium amount constitutes Rs 38.68 lakh crore of the total Rs 100 lakh crore worth of loan outstanding in the banking system.
This figure has been calculated based on the average 65 per cent loan moratorium requests from corporate and retail borrowers from their outstanding term loan book of Rs 60 lakh crore in December 2020. This Rs 60 lakh crore outstanding loan, however, excludes the working capital loans and loans disbursed between January to March of 2020.
The private banks have disclosed that 25-30 per cent of their loan book is under moratorium. Small finance banks and Bandhan Bank with a focus on micro loans have said that their moratorium book is as high as 90 per cent. The public sector banks, which control bulk of the advances, have said that 65 per cent of their loan book is under moratorium.