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Affordable housing loan defaults rise post-covid to 7.2 percent: ICRA 

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While losses have remained limited and NPAs remained in control, the 30-day plus dues have increased to 7.2 percent for AHFCs, said ICRA.

Affordable housing loan defaults rise post-covid to 7.2 percent: ICRA 
The affordable housing finance corporations (AHFCs) have been growing at higher rates than the industry in the past but they witnessed a moderation following the outbreak of COVID-19 infections. The companies have witnessed a moderation in asset quality in the last two fiscals, a report by rating agency ICRA said.
"COVID 2.0 exerted further pressure on the asset quality indicators of these players, especially in the softer buckets where delinquencies have shot up significantly," ICRA said.
To put this into perspective, the 30+ days past due (dpd) for some AHFCs has risen to 7.2 percent as of June 30, 2021. It is higher than the estimates of 3.2 percent as of March 31, 2021.
However, non-performing assets, which are characterized by 90-days plus dues, have remained mostly under control. NPAs stood at 1.6 percent in June 2021.


While the pandemic severely affected incomes, employment and savings, AHFCs are struggling as customers are finding it hard to pay back their loans.
The government had provided schemes like moratoriums and restrictions on bucket movement during the first wave of the pandemic. But similar support was missing during the second time. It's for this reason the 30-days plus dues only stood at 3.2 in March 2020 and at 2.3 percent in Q2 FY22.
So the forward movement for the sector will be contained for most players in the short term. Over the long-term, however, the ultimate losses to the lenders could be limited, the report said.
These AHFCs have also strengthened their balance sheets through additional covid provisions and higher expected credit loss provisions in the FY2020-21.


 
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