For fintech lenders, another bleak year

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The temporary resolutions offered by fintech lenders to consumers affected by the fallout of Covid-19 are coming back to haunt them. Not only are borrowers who availed EMI holidays or reduced instalment options in December unable to fulfill their April repayment commitments, overall, 20-30% of the loans disbursed last year haven’t been repaid on time.

Cheque bounce rates increased by 1.5-2 times in the first two weeks of April, as compared with pre-Covid repayment trends, for the category of borrowers who had availed moratoriums, according to two executives at fintech lending startups. Between January and March, these loans had been reported as standard in the hope that the borrowers would be in a better position by April to repay their loans.

“Looking at the situation in April, it looks like there will be massive slippages in those loans and the next big challenge for the lenders is to set out to collect this money,” said one of the executives.