Covid times have made even the good payers struggle to make the payment to the banks. People who have opted for a moratorium are struggling to pay their dues.
The covid pandemic has impacted the whole country in a very bitter way. Many places in the country are witnessing extensive lockdowns and due to which the income of the individual is not steady. The businessmen are suffering losses in their businesses while the salaried individuals are finding it hard to hold on to their job, finding a job or getting a due paid to them.
Fresh credit in future will be available only to individuals with a good credit score. But in order to maintain a good credit score, one has to pay EMI on time.
The major challenge lies with the banks who have been trying to find out new and dynamic ways to operate despite this pandemic. In the absence of physical recovery agents, banks have to go for digital recovery in this pandemic and lockdown situation. The general impact of Covid situation on banks and citizens are-
- As we know a moratorium is a relief period given in which the borrower does not have to pay their EMI. Many good payers whose credit score is good and are considered less risky by the banks have opted for a moratorium due to lack of funds. But even these people are able to struggle to make the payments.
- The cheque bounce rates in banks are still higher than in the pre-pandemic situation. The rate stands at 20% and is expected to move up with the second wave of the covid pandemic.
- The cheque bounce rate for customers with a High Credit score pre-covid is at about 24%
- The cheque bounce rate for customers with a Low Credit score pre-covid is at about 46%
- Around 20-25% of good payers who opted for a moratorium are struggling to make the payment
To help everyone in the time of distress and with the emergence of the second wave of covid, RBI came with an extension to the moratorium period. Earlier as less than 10% of people opted for a moratorium but with moratorium 2.0 saw a huge surge. Around 43% of the people opted for it. Most of the borrowers belonged to middle-class families and residing in metropolitan cities.