The moratorium has significantly reduced Indian ABS’ loan collections and increased liquidity risk, which is the risk that transactions’ cash flow will be insufficient to meet required investor payments. Lenders are not reporting loans under moratorium as delinquent. As a result, delinquency rates no longer provide a full picture of the extent of problem loans in the ABS portfolios.
Consequently, monthly collection ratios have become a more reliable performance indicator than delinquency rates for ABS.