InvestorQ : Do we have to be concerned that banking NPAs could shoot up once the EMI moratorium is totally lifted by end of August 2020?
diksha shah made post

Do we have to be concerned that banking NPAs could shoot up once the EMI moratorium is totally lifted by end of August 2020?

Answer
user profile image
sara Kunju answered.
3 months ago


While the clear picture will emerge only when the EMI moratorium is lifted in August 2020, a report by Macquarie has dismissed such apprehensions.

The report by Macquarie has asserted that concerns over rising NPAs in retail loans may be largely overplayed and that the impact would be minimal.

Many analysts had expressed worry that credit profiles of borrowers could worsen after the EMI moratorium was lifted as there could be a cash flow gap.

However, Macquarie has noted in its report that since the end of May the total loan book under EMI moratorium had fallen sharply from the erstwhile levels of 30%. For example, HDFC had reported that the retail loans under deferral had fallen to as low as 7% by mid June this year.

Hence the defaults were expected to be marginal. It must be remembered that HDFC is a sound lender and the real problem may be more pronounced in smaller NBFCs and mid-sized banks that have MSME exposure.