Collections of securitised pool went down during second wave, recovered in June: CRISIL

CRISIL has attributed increased digitisation and the absence of a moratorium on repayment for the softer fall this time as compared to the first wave.

The second wave of COVID-19 pandemic in the country contributed to a fall in collections ratios of the securitised pools, says a report by Indian analytics firm Crisil. The increased cases of COVID-19 followed by lockdowns in several states led to a sequential decline in the collection of securitised pools during the months of April and May. However, the fall was not as drastic as that witnessed during the first wave in 2020.

CRISIL has attributed increased digitisation and the absence of a moratorium on repayment for the softer fall this time as compared to the first wave. Last year, collections fell drastically as collection agents could not move due to the Coronavirus induced lockdown. The borrowers also availed of the moratorium facility, thus driving down collection efficiency.

In the wake of the pandemic, the finance companies decided to digitise their collection processes by incorporating electronic modes such as auto-debit, payment gateways and dedicated applications, said Crisil. Digital collections have “played an important role in preventing a similar fall in collections during the second wave,” according to Krishnan Sitharaman, Senior Director, CRISIL.

Further, lockdowns were imposed this year in a localised manner, reducing the impact on their business activities. As the pace of digitisation picked up after COVID-19, the cash flows of businesses have become more secure from disruptions, Crisil added.

For the June 2021 quarter, the numbers of securitisation deals received a boost in the month of June, after remaining muted throughout April and May. In fact, over 60% of the deals of the quarter were made in June only. However, the volumes have only reached about half of the average during the pre-pandemic period.

The fall in investor appetite during the period meant that even though deals were being negotiated, not many of them could be completed.

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