The Digital Lenders Association of India (DLAI) has submitted a set of recommendations to the Central Government to facilitate and maintain continued availability of credit to consumers and micro, small and medium enterprises (MSMEs) in the country. DLAI represents over 80 digital lenders and associated service companies across the country.
The recommendations are divided into two parts: support for existing borrowers, and continued flow of credit.
Throwing its weight against providing any debt restructuring to borrowers, DLAI said the Government should instead provide temporary financial support to meet expenses, including debt repayments. But if the government insists on a moratorium on loan repayments for certain segments of borrowers, it should also provide similar relief to the lenders, DLAI said.
Speaking to BusinessLine , Anurag Jain, Co-founder, KredX and Executive Member – DLAI, said: “The liquidity has to be two-way ― for the borrower as well as for the lenders. The lenders too should be shown some consideration, because they are the ones who will suffer casualties.”
DLAI also said a direct liquidity window should be opened for its members through either the RBI or entities such as SIDBI. This will prove to be very effective for these members of DLAI to continue to supply credit to the most vulnerable members of society.
Enhancing the Credit Guarantee Scheme by easing the definition of accepted loans will help existing lenders buy cover on the portfolios, DLAI added.
The association has also sought an extension of the existing 90-day timeline for classifying a delinquent loan as non-performing asset (NPA) to 180 days in view of the disruption caused by the coronavirus.
“The effect of the lockdown will start from the end of this month as regards EMIs and repayments. They will not be able to prepay. Defaults may happen. Most of these businesses do not have capital adequacy. They don’t have back-up for more than a month. Anything that goes beyond that point will be problematic for the sector,” explained Jain.
“We are looking for a package to address these issues,” said Jain.
To achieve continued flow of credit, DLAI said loan pools that have been accepted under the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) scheme be purchased through public sector banks and rating requirements be suspended for now. DLAI said it would support any direct transfer scheme rolled out by the government that would temporarily replace lost income of households.
To facilitate continued flow of credit through digital lenders to the borrowers, DLAI said the Government should allow all non-bank lenders regulated by the RBI to use eKYC for NBFCs. It said eSign should be allowed for digital loan agreements and a temporary hike in borrowing allowed under eKYC to ₹10 lakh for NBFCs.