The Carona crisis has increased the odds for every common and special. Consumers have started defaulting in EMIs due to declining earnings or loss of jobs. This has led banks and NBFCs to fear of getting stuck in debt. According to the report of the National Automated Clearing House, after the Moratorium was over on August 31, the default rate of EMI reached 41 percent in September from 31 percent in February. Despite this, first of all, you are leaving no stone unturned to lure customers by giving cheaper loans and later preparing for debt recovery by adopting all methods. E-commerce companies have also become a better way for banks and NBFCs to reach customers in the festive season. In such a situation, if you are planning to buy through EMI on the occasion of festivals, then do every kind of investigation, otherwise you can get into trouble.

Bank-NBFCs are gearing up for recovery

Currently, the Supreme Court has stayed the loan APA. RBI asked Supreme Court to lift ban on declaring NPA. Actually the default has increased after the moratorium is over. But banks and NBFCs are having trouble recovering debt. Banks and NBFCs have started recruiting new recovery agents. The rise in defaults has led banks and NBFCs to fear that their debt could be stuck.

Shopping should not become expensive anywhere

Depending on the category of the loan, its risk is determined. Experts say that credit cards and personal loans fall under the unsecured category of debt, which increases the interest on them. Also, there is a sharp drop in credit score due to default in bill payment or EMI. Home loans and car loans fall under the secured category. However, their EMI defaults lead to a lower credit score than unsecured debt. Despite this, banks can take over the house and car in case of default. In this case, take any decision only after assessing your financial situation.

….. But the golden trap of debt is ready for you

Preparing to distribute loans on easy terms: Banks are planning to distribute credit cards, personal loans, home loans on the festival by seeking reports from credit rating agencies. Many attractive offers are being offered in it. Banks and credit card companies had tightened the terms of loan disbursement during the moratorium period. But now every kind of loan is being available on very easy terms. Companies say that in the next one to two months festive season the demand for loans will be very high. HDFC said that its debt reached Corona East 95 per cent in the September quarter. Credit card companies are also seeing increasing demand.

Breaking the pocket through e-commerce: Spending cuts by consumers have become a major challenge for banks in the Corona crisis. In such a situation, e-commerce companies have become a silver lining for them. E-commerce companies have tied up with 70 banks and NBFCs for product financing. Different types of offerings are being offered for this.

Offer to pay after one year: E-commerce, banks and NBFCs have come up with a new offer on festivals this year. In this, the option of making 70 percent payment on purchase through EMI and 30 percent payment next year is being given. It has the option of paying 30 per cent on the exchange next year (old exchange) or keeping the product earlier. Not only this, the minimum duration of EMI has been increased from six months to nine months.

An eye on small-town customers:

E-commerce companies make up 75% of their total sales on festivals, with most being purchased through EMI. Of this, about 75 percent of the buyers are from second tier cities (small towns). E-commerce through banks and NBFCs do not want to leave any core effort to reach these customers through affordable EMI. Flipkart plans to reach 70 million buyers this year. At the same time, Amazon plans to reach five crore buyers.

The challenges

The default rate was 31 percent in February

Till June 30, 8.36 billion rupees of banks’ debt was stuck

06 month Moratorium was given by RBI by 31 August

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