Kochi: Most traders in Kerala are finding the going tough as the continuing pandemic curbs have hit their businesses badly. As they can't repay loans in time due to the restrictions enforced in the state due to COVID-19 banks their credit scores are bound to fall, thereby risking their chances of benefitting from lenders in future.
The drop in credit score, which is determined by the credit rating agencies, would adversely affect the eligibility of each trader for seeking loans in future. Most of the traders who are likely to face problems in repaying debts are currently taking the rounds of the banks for getting their loans restructured.
According to finance department estimates, about 15,000 business establishments might have shut shop during this period. Most of the business establishments are of small traders who were plunged into a crisis after the demonetization of high-value currency notes in late 2016. The lockdown in the wake of the pandemic have worsened their financials.
The retail credit wing of various financial institutions have pointed out that the loans given to such institutions would turn NPAs in no time.
The non-payment of loans by traders is also expected to reflect in the performance of banks which is scheduled to be declared soon.
One of the major reasons for the mounting debts of banks is the non-payment of corporate loans. That is why most of the banks recently gave priority to disbursement of retail loans including those to the traders.
Non-payment of loans is not only affecting the banks but also non-banking financial institutions.
