‘Borrowers have started repaying, post moratorium’

Arulselvan D.  

With the moratorium winding down, almost all the borrowers have started repaying loans, according to a senior official of the Cholamandalam Investment and Finance Company (Chola).

“More than 95% of our customers have started servicing loans, post moratorium,” said Arulselvan D., executive VP and CFO. “Other NBFCs also seem to have seen the trend. So, the industry hit rate is about 80-90%.”

For the quarter ended June, Chola’s assets under management had grown 13% to Rs. 67,182 crore from a year earlier, of which vehicle finance accounted for 73%

Mr. Arulselvan explained that since the company’s borrowers used loan funds to earn a livelihood, it was critical for them to retain the asset against which they had taken the loan, as well as maintain good credit profile for future loans. “Credit behaviour has improved considerably,” he said.

However, from a cash-flow perspective, borrowers’ businesses were still not back to pre-pandemic levels.

“Our customers are still facing challenges, running at 60-70% capacity. Only if they cross 70-75% capacity, would they have something left after they pay their EMIs,” said Mr. Arulselvan.

On disbursements, the Chola CFO said the second quarter saw improvement but they were still slower than the year-earlier period.