By Shashank Didmishe
The progress in car loans issued by the banks continued on a downward trajectory in May as semiconductor shortages weighed on manufacturing which additionally impacted gross sales. Banks’ car loans excellent as on May 31 was at Rs 4.2 trillion, which was up by 1.2% month-on-month. The progress within the car phase has slowed for 2 consecutive months, in line with the newest Reserve Bank of India (RBI) information.
In April, car credit score excellent grew by 2.7% on month. In distinction, banks’ car mortgage portfolio improved by a sturdy 22.2% on-month in March and 17.1% in February.
“The semiconductor shortage still persists and has impacted the original equipment manufacturers’ (OEM) ability to meet demand,” H T Solanki, normal supervisor of mortgages & different retail belongings at Bank of Baroda mentioned. While expressing the identical view, Krishnan Sitaraman, senior director and deputy chief rankings officer of CRISIL Ratings mentioned that the semiconductor state of affairs is certainly enhancing and that’s starting to be mirrored within the volumes.
Sales of passenger automobiles declined sharply by almost 10% month-on-month in April and marginally by 0.2% month-on-month in May. With this fall on a month-on-month foundation, the gross sales of the passenger car phase remained under the 2018 degree in May, in line with Society of Indian Automobile Manufacturers (SIAM).
Banks have 70-75% market share in passenger car loans as it’s an rate of interest delicate phase, however have a decrease share of round 40% within the industrial car (CV) mortgage phase. “Hence, growth trends in vehicle loans in the banking sector are more driven primarily by what happens in the car loan segment,” Sitaraman mentioned.
Additionally, pent-up demand for car loans could have led to February and March posting larger mortgage excellent within the phase and there may be the standard yr finish push from lenders in March which supplies tailwinds to volumes on the finish of a monetary yr, Sitaraman mentioned.
Vehicle loans type a serious chunk of the private mortgage portfolio of the banking sector, contributing 19% of the entire private loans. Personal loans, that are at present driving the entire credit score progress for banks, represent greater than 25% of the entire financial institution credit score excellent, RBI information reveals.
Despite the slowing progress within the car mortgage phase, there are expectations of banks’ car loans regaining momentum. Bank of Baroda expects the upcoming festive season to be a powerful one. In Q3FY22, the lender posted 19.5% on yr progress in its auto mortgage e-book. With the decision of provide facet points and a few new launches within the pipeline, Sitaraman expects a structural shift driving automobile gross sales and demand for finance.
Source: www.financialexpress.com”