three times what we were paying in March 2020. So, in a 15-month period, the number of claims that we are paying has gone up by three times,” IMGC’s chief executive Mahesh Misra said.
Currently, the IMGC guarantees home loans worth ₹120 billion for about 20 banks and home financiers, including the State Bank of India (SBI) and the Housing Development Finance Corp (HDFC). The company usually guarantees 20 per cent of the loan amount which would cover monthly instalments for nearly two years. This means that IMGC would pay the monthly instalments to the lender on behalf of the borrower in the event that an account becomes a non-performing asset.
According to Misra, despite the sharp rise in the number of claims amid the pandemic, the company believes “the worst is over”, as it expects to situation to stabilise going forward.
“Between last June and this June, delinquencies nearly doubled again. But given that two years ago delinquencies were negligible, they have still not reached worrisome proportions,” he said. “What also happens is that we tend to guarantee loans that are inherently riskier; so our delinquencies will always be little higher than a lender’s overall portfolio delinquencies.”
