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No let-up in commercial vehicle loan defaults: India Ratings

Last Updated: Friday, April 19, 2013 - 20:32

Mumbai: The pressure of defaults in the commercial vehicle (CV) loans that originated in 2011 and earlier is easing, but those disbursed in 2012 are witnessing more delinquencies, says a report by India Ratings.

"The pressure of delinquencies in commercial vehicle loans rated by India Ratings (2011 and earlier) is showing signs of easing," the report said.

However, the situation is quite different for CV loans originating in 2012 as they continue to see rise in delinquencies and show no signs of abating, it said.

About CV loans given in 2011, the rating agency said the defaults have not increased in the last 12 months and have stabilised at 2.15 per cent of the total disbursals.

"This can be attributed to the loan servicing efforts of non-banking finance companies (NBFCs) who have so far been partially successful in stemming delinquencies in their portfolio."

Since being disbursed, such loans (2011) have been repaid on an average of almost 63 per cent of the amount despite a slowdown in the economy, the rating agency noted.

About CV loans given in 2012, it said, "these newer vintage of loans were originated in the middle of an economic situation characterised by sluggish road freight demand on account of continued moderation in industrial activity and compression in margins for truck operators due to higher diesel prices.

The firm said 3.38 percent of loans disbursed last year have not been repaid for more than 90 days. "This higher level of delinquencies at an earlier tenure of the loans is an indication of stress being faced by truck operators in repaying their monthly instalments."

The report further said the sluggish economic activity will continue to have negative impact on freight income of borrowers with implications of debt serviceability.


First Published: Friday, April 19, 2013 - 20:30
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