Most of the banks' borrowers of retail and corporate loans seem to be staying away from availing the three-month EMI (Equated Monthly Instalments) moratorium under the Reserve Bank of India's (RBI) Covid Relief Package.
The three-month moratorium is a deferment of EMIs and not a waiver. The banks are either increasing the tenor of the loan with additional EMIs or adjusting the deferment amount in the existing EMIs over the life time of the loan.
The country's largest bank, the State Bank of India (SBI), has claimed that only 10 per cent of its borrowers have asked for a moratorium. The third-largest in private sector, Axis Bank, has disclosed that 10-12 per cent of its borrowers have opted for moratorium till April, while the number is between 25-28 per cent in terms of loan value. HDFC Bank, says its numbers are in single digit. The largest private sector bank has very few borrowers in the wholesale segment opting for moratorium, but retail customer applications have seen a surge. IndusInd Bank claims only 5 per cent of its borrowers have used the moratorium.
Clearly, the numbers don't look large given the lockdown and close of business activities. One of the reasons could be the percentage of borrowers disclosed by the bank instead of the percentage in terms of value term. If one takes the Axis Bank data in value terms, the moratorium share in total loan of banks should be less than 30 per cent.
Also, expert suggest that the numbers may surge as banks have computed these figures at varying dates from March-end to April-end. There is also no deadline or last date for borrowers to apply for moratorium; the requests continue to flow.
"There are also instances where borrowers who have opted out from moratorium are coming back to take the benefit," says a banker. The low moratorium request doesn't suggest full extent of coronavirus' impact. Cases and deaths are on the rise and factories and companies are still to restart or maximise operations to full capacity.
Bankers say coronavirus-impacted sectors like MSMEs, hospitality, tourism, transportation are the ones availing the moratorium. "MSME players are most vulnerable. Even if they have cash, they want to preserve cash flows for future contingencies," says Padmaja Chunduru, Managing Director & CEO at Indian Bank.
Currently, the banks' MSME book constitutes roughly about 20 per cent of the total outstanding loans of Rs 90 lakh crore.
The banks' retail portfolio is largely salaried class with a major share of secured home loans. These customers haven't opted for moratorium in big way. Many have realised it's only deferment of EMIs and not a waiver.
But there are others who have availed the facility.
The banks claim that some have opted for moratorium even though they have enough money in their accounts and are receiving salaries. They probably want to conserve liquidity for any future contingencies as private sector employees fear pay cuts and job losses.
In the medium to large corporate segment, the banks have offered an 'opt in' model where firms have to make a strong case before the lender for getting a moratorium. The banks are quite strict in analysing each application. "Banks always have a fair idea about their large customers because of the long relationships," says Ashutosh Khajuria , CFO & Executive Director at Federal Bank.
"We understand their supply chain, raw material and distribution issues. It is easier for us to see whether a corporate customer is a genuine case or not," he added.
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