LOAN DEFAULT ALERT!
ETAIL LENDERS have been facing several challenges due to Covid-19. On the one hand, the demand for small loans has surged as lockdowns hit livelihoods, while on the other hand, the recovery rate has slowed. Consequently, the rise in loan delinquencies has lowered credit scores of borrowers.
“The creamy layer or lowrisk borrowers have seen around 5 per cent fall in their credit score from March 2020 to March 2021,” says Subhrangshu Chattopadhyay, National Sales Head, CRIF High Mark, an RBI-approved credit bureau. A credit score shows your creditworthiness. That is why lenders have tightened their credit policies. Most are lending only to existing customers with good credit history. A CIBIL score of 750 or above is ideal for availing loans. If your score is below 750, it will be difficult for you to get loans from banks and NBFCs. If it is close to 750, you will get loans, but at a higher rate of interest.
While the trend of rising loan defaults has affected the lenders, for the borrowers, too, a default has serious consequences. One, it may dent his or her ability to avail a loan in the future. And two, even
