Shadow Banks which included the Fintech Lenders were the main reason for the rise in auto-debit failures that had continued even after October. This includes the automatic payments which are recurring every month where the amount is drawn from the account every month, The failure rates were high from the NBFCs and commercial vehicle borrowers.
The people who had taken loans from fintech lenders had also faced problems as they did not have enough income which was reduced due to COVID. Approximately 40.1% of auto-debit transactions in October had failed. It was due to insufficient funds in the accounts.
The senior official at SBI said that the large banks have the majority have their own customers who are also their borrowers. The current defaulters were the borrowers from the NBFCs. There are also self employed-individuals who do not pay every month.
However they pay a couple of months fee at a single go, The fact that the passenger transportations systems have not been operating yet also led to the default in repayment in those segments,
One of the adverse effect of the pandemic is that people had to borrow from fintech lenders and pay a very high-interest rate. The interest rates for these loans go upto 30%.enough income which was reduced due to COVID.