Nearly Two-Thirds Of Auto Industry Loan Requirements Met By Private, Foreign Lenders: Crif High Mark

Nearly two-thirds of the Indian auto industry’s loan requirements are taken care of by the private and foreign lenders, a report by Crif High Mark said.

In terms of value of the loans extended, private sector lenders have the largest share at 41.4%, foreign banks accounted for 24.4% and state-owned lenders came third with 19.6% share, the report prepared in association with the Small Industries Development Bank of India said.

Referring to data dating back to June 2020, the credit information company said state-owned lenders lead by loan volumes, accounting for nearly 35% of the vehicle loans.

The auto industry had been facing problems because of the fall in economic growth and regulatory changes before the pandemic itself.

From an asset quality perspective, the non-performing assets ratio on the loans taken by auto and auto components industry declined to 9.59% as of June 2020, the report said.

It can be noted that starting March 2020, the Reserve Bank of India had given a six-month moratorium on loan repayments and allowed lenders not to recognise non-payments as NPAs. After the end of the relief period, the Supreme Court had ordered a standstill on loan recognition.

Out of the total credit availed by the auto and auto components sector, term loans constitute 48%, followed by working capital loans at 33% and other funded credit facilities at 18%, it said.

As of June 2020, NPAs of term loans stand at 14.7% while the same for working capital loans were at 5.2%, the report said.

There were total 1.29 lakh borrowers in the sector as of June, it said, adding that in terms of number of loans availed, 91% was by micro, small and medium enterprises.

The overall credit outstanding to the industry went up by 1% in the June quarter to Rs 1.13 lakh crore, which is 12% of the sectoral turnover of Rs 9.4 lakh crore.

The top 8 automobile clusters together constitute 80% of the credit portfolio as of June 2020, it said.