NBFCs, HFCs collections improve in Q2 FY22

Mumbai: Domestic rating agency Icra Ratings on Wednesday said the collection efficiency in its rated securitised retail pools originated by non-banking finance companies (NBFCs) and housing finance companies (HFCs) has witnessed an improvement in the second quarter of fiscal 2022.

The improvement was on account of the continued decline in fresh Covid-19 infections during June to October 2021 period, a high share of the vaccinated population and uninterrupted operational activities of these entities, the agency said in a report.

The agency's Vice President and Head - Structured Finance Ratings Abhishek Dafria said,

"with the operations of lenders achieving close to normalcy levels in Q2 FY2022, the monthly collection efficiencies recovered to pre-second wave levels across the asset classes as observed in ICRA-rated securitised pools."

Securitisation involves transactions where credit risks in assets are redistributed by repackaging them into tradable securities with different risk profiles. It may give investors of various classes an access to exposure which they otherwise might be unable to access directly. The agency said that the collection efficiency (including overdue collection) for the most affected asset classes, viz microfinance and SME (Small and medium-sized enterprises) loans, reached close to 100 per cent for September 2021 from a low of 80 per cent seen in May 2021.