The coronavirus pandemic and quarantine measures implemented in Russia and other countries are becoming arguments for debtors who work with debt collectors and who are trying to transfer payments, RBC reported in the National Association of Professional Collection Agencies (NAPCA). According to the organization’s estimates, these are still isolated cases: reasons related to coronavirus account for less than 1% of all debt repayment refusals.

Similar appeals are recorded by banks: even conscientious customers began to refer to the situation with the epidemic, Raiffeisenbank and ROSBANK reported.

Real reasons or excuses

“Someone refers to the fear of going out, someone to self-isolation, someone to the fact that they are already ill,” said Elman Mekhtiev, the President of the SRO NAPCA. According to him, while the vast majority of such explanations are perceived by debt collectors as excuses. “At the moment, only 0.0005% of the population has been infected, and in many regions they are single cases (one or two for the entire region). Almost all excuses related to the pandemic are aimed at avoiding responsibility. None of these debtors have not provided any evidence that the reason for non-payment of debts lies in the pandemic,” — emphasizes the interlocutor of RBC.

There are still single confirmations that solvency is declining against the background of the epidemic, says David Tsatsua, the CEO of the debt collection agency SAVD: “Recently, we received a letter from a debtor who works in China in the field of education. Due to the fact that all schools do not work, and she can not teach remotely, her income has decreased, and she asked us to provide her with an installment plan.”

Pavel Mikhmel, the CEO of the First Collection Bureau (FCB), said that the company’s employees have only received requests from clients who are under quarantine, and not those who have fallen ill. According to him, such debtors ask for deferred payments “within the agreed schedules”.

“At the moment, there have been no applications from debtors about coronavirus disease. We record calls in which debtors say that they are afraid to leave their homes and go to pay to a bank, ” said Fedor Vachata, the CEO of M.B.A. Finance. He emphasizes that most lenders allow citizens to pay off their debts online. “We can’t say that such appeals reflect the real picture: some people just decided to take advantage of the opportunity and delay the payment itself, some are actually scared. But it’s a solvable situation” — Vachata sums up.

“Starting from mid-March, not only debtors, but also loyal customers began to apply for loan restructuring in connection with the loss or reduction of income due to the pandemic. Among the reasons are the tourist business, quarantine after a trip abroad, and the reduction of the working week at an enterprise,” said Ekaterina Aliyeva, the Director of the analytical management Department at ROSBANK.

Credit vacations and individual approach

“Clients who have funds, but can not reach the Bank branch (as in the case of self-isolation), we focus on paying via remote channels. We suggest the clients facing a temporary decline in income to complete an application for restructuring, ” said Alexey Kramarsky, the Head of credit risk management Department for  retail segment at Raiffeisenbank. According to him, while the pandemic and quarantine refer to less than 1% of those who came out on delay.

Most of these debtors are still talking about temporary difficulties and promise to make payments in the near future, says Alieva from ROSBANK. Bank employees try to check information through employers, as well as analyze the situation “in the context of industries and regional specifics” in order to develop an individual approach.

Major Russian banks have already announced credit vacations for their clients who are in a difficult life situation due to the coronavirus. This option, in particular, was provided by Sberbank, VTB, Gazprombank, Alfa-Bank, Rosselkhozbank, OTKRITIE and MKB, according to their messages. This is how market players reacted to the Central Bank’s appeal: on March 20, the regulator recommended that banks, microfinance companies and credit cooperatives introduce relief for borrowers who have fallen ill with the coronavirus. The regulator did not give any recommendations to debt collection agencies.

“When we receive such information, we take it very seriously,” says Anton Dmitrakov, the General Director at debt collection agency EOS. According to him, in order to check the words of debtors, debt collectors monitor “the epidemiological situation in the country as a whole and for each region in particular.”

“We will consider each case individually,” Tsatsua notes. He did not specify whether the company is ready to soften the terms of debt repayment.

Restructuring or deferral of payments is a standard option, regardless of whether the borrower’s problem is related to coronavirus or not, emphasizes Mikhmel: “In case of any difficult life situations, including due to the client’s illness or forced disability, we provide a temporary significant reduction in payments and deferral.”

Risks and revenue falling

Debtors’ refusal to pay their obligations may become more justified over time, Mekhtiev warns. “As a rule, avoiding responsibility, people tend to come up with reasons that are related to the problems discussed in the public space. However, as part of the financial services market, we are preparing for a possible change in the situation and are discussing measures to support debtors, ” the President of NAPCA states.

In the future the payment discipline of debtors will worsen, Vachata predicts. “This is mainly due not to the fact of the disease itself, but to the fact that many companies have to suspend their activities for an indefinite period, somewhere there is a reduction or delay in wages. Most of our debtors live in regions where there are no cases of infection at all or they are isolated, but in a situation where the quarantine is declared and mass events are prohibited, this will affect the income of the population,” he explains.

If the spread of the coronavirus continues to grow, in the near future, for this reason, every 15th debtor will stop paying, estimates Yuri Kudryakov, the CEO of the financial market “Unicom24”. “In conditions when all institutions (sports complexes, restaurants, cinemas, shopping centers) will be closed, the income of customers will also decrease. According to the statistics, more than a quarter of borrowers are employed in the service sector, so they will be at risk firstly.” But he does not rule out that some of the debtors will simply try to avoid responsibility.

“We do not predict a significant deterioration in payment discipline, since such requests are less than 0.1% of all customers,” says Mikhmel.