Leading role of private and foreign banks in auto industry loans

Mumbai, Ta. 20 January 2021, Wednesday

Private and foreign banks or lenders play a major role in providing loans to the auto industry in the country, followed by government banks providing loans to the auto sector.

A look at the Credit Information Company's June 2020 report shows that private lenders accounted for 51.50 per cent of loans disbursed to auto and auto component companies, while foreign banks accounted for 2.50 per cent and state-owned banks for 15 per cent. Ranked. However, in terms of loan volume, state-owned banks accounted for 4 per cent.

The impact of sluggish economic activity and regulatory changes on the auto industry in the pre-Corona period was exacerbated in the early days of the epidemic. In terms of asset quality, non-performing assets (NPAs) accounted for 4.5 per cent of total auto loans, the report said.

Out of the total loans taken by the auto industry, 9 per cent were term loans, while 5 per cent were for working capital requirements and other types of loans were 15 per cent.

The number of borrowers stood at 1.5 lakh, of which 51 per cent were micro, small and medium enterprises (MSMEs). In the June quarter of 2020, the auto industry's overall credit outlook rose 1 per cent to Rs 1.18 lakh crore. The annual turnover of the country's auto sector is estimated at Rs 2.50 lakh crore.