Over 55% Of People May Seek Loan Recast Amid Covid Crisis: Survey
Commuters wearing protective masks exit the Chhatrapati Shivaji Maharaj Terminus (CST) railway station in Mumbai, India. (Photographer: Dhiraj Singh/Bloomberg)

Over 55% Of People May Seek Loan Recast Amid Covid Crisis: Survey

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About 65% of people polled in a survey have said that the Covid-19 pandemic and ensuing lockdowns hit their income and 56% respondents claimed to have availed moratorium on loan and credit card dues.

The consumer survey report ‘Dealing with Debt: How India plans to pay EMIs’ by paisabazaar.com was undertaken to gauge the impact of coronavirus pandemic on the Indian borrowers’ income and loan repayment capacity.

It surveyed 8,616 customers with debt outstanding of over Rs 1 lakh in the age group of 24-57 years, covering 37 cities.

"In our survey, a whopping 65% of the respondents said the coronavirus pandemic and the resultant lockdown has had a negative impact on their income. About 16% of them claimed to have lost 100% of their income with another 28% reporting income reduction of more than half due to the ongoing Covid-19 crisis," it said.

As per the survey, 56% of the respondents said they had availed the moratorium offered by their lender banks or NBFC on their loans/credit card outstandings during March-August.

Paisabazaar.com said more than half of the customers surveyed said they want to apply for loan restructuring.

"55% of the customers responded that they would approach their lender to restructure their loan in some form to provide relief. Within those who have already availed the moratorium, 70% of them said they would like their lenders to provide them with some form of relief in their loan repayment," as per the survey.

However, the surveyor said that these include many whose income has not been affected due to the coronavirus pandemic and hence their lenders may not find them eligible for a loan recast plan.

As a relief to the financially stressed borrowers, the RBI had permitted two stage moratorium from March to August that allowed deferment of EMIs and credit card payments.

The survey further said that as many as 46% of the customers who had availed moratorium said they do not want a new moratorium. As many as 67% of the moratorium beneficiaries expressed their loan tenure to be extended by up to 6 months only to bring down their EMIs.

As per the findings of the survey, 86% of the self-employed customers said the pandemic has adversely impacted their income while 25% claimed their income has come down to zero.

On the other hand, 44% of the salaried respondents said their salaries had not been negatively affected. Another 30% said their salaries had been reduced by more than half from the pre-Covid levels while 12% claimed to have reported complete loss of salary due to job loss.

Geography-wise, Chennai came out to be the least impacted city by the coronavirus pandemic in terms of loss of income.

Also read: SBI Seeks Promoter Guarantee, Share Pledge For Non-Personal Loan Recast

Over 48% of consumers surveyed from Chennai said they did not suffer any negative impact due to the health crisis and the resultant restrictions imposed. Only 9% suffered a 100% income loss.

On the other hand, Delhi and the NCR cities were the most impacted, with 70% of their resident participants reporting a negative impact on income.

Among these, 16% of customers from the NCR also said their income has come down to zero due to the pandemic related disruptions.

In terms of the percentage of customers who had a complete loss of income, Mumbai fared the worst with 26% respondents from the city reporting income plummeting to nil.

Also, Mumbai had the highest percentage of moratorium takers at 65%.

Also read: Why This Bank’s Customers Are Swiping Their Credit Cards For Cash

"With the moratorium now over, when we asked consumers about their capacity to repay their EMIs, 66% of respondents from Chennai said they would be able to afford their monthly debt obligation in full.

"Mumbai was the worst place, with Delhi and Bengaluru only marginally better. 52% of Mumbai respondents cannot pay their EMIs in full, with 15% of them saying they currently have zero payment capacity," paisabazaar.com said.

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