Non-Banking Financial Companies (NBFCs) are preparing to start sanctioning fresh loans from June as the 20 lakh crore Stimulus Package of Indian Government successfully boosted their sentiment. Their decision came after various kinds of relief was given to people and businesses in Lockdown 4.0 which created the hope for the economy to pick up soon and rebound.
There has been demand from clients of NBFCs to decrease the limits sanctioned in March. This demand could mean that there can be a surge in debt-related activities. NBFCs are anticipating a double digital loan growth for quarters of September and early December.
Although the process of loan sanctioning may tighten as NBFCs are aware that many businesses are stressed which also has wide-ranging impacts on many people, from joblessness to salary cut. Giving loans in such a scenario can also be risky and their sanctioned loans can get converted into bad loans.
Though their optimism in economic rebound after easing of Lockdown by the government has dominated over their fear of repercussions from the current scenario on resuming operations.
Key NBFCs such as IIFL Finance, Mahindra Finance and Shriram Transport Finance are among the companies that have a positive outlook towards resuming loan sanctioning process.
IIFL has started operations at 1,800 branches and is sanctioning digital loans transactions for credible existing customers. Mahindra had started sanctioning loans from March. Smaller NBFCs and Micro Finance Institutions (MFIs) have also started disbursing emergency loans to their clients.