Tag: vehicle loans

Lenders get set for festive season; offer home, vehicle, gold loans at attractive rates, BFSI News, ET BFSI

Banking & Finance

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Lenders in the BFSI space are gearing up for the festive season, offering reduced interest rates on home and vehicle loans, and other discounts to customers.

Punjab National Bank, State Bank of India and Kotak Mahindra Bank are among the banks providing festive offers, while Mahindra Finance is among the non-bank lenders offering discounts on its loan products.

Also read: Ahead of festive season, banks slash interest rate on home loans. Get the details here

Here are the latest updates, so far, this week:

Mahindra Finance
Mahindra Finance on Wednesday launched festive offers on its vehicle loans for two months, providing offers and discounts to customers at competitive rates.

‘Shubh Utsav’ has been launched with immediate effect, and will continue till the end of November. It has special finance schemes, specifically for customers who plan to avail vehicle loans during these two months.

The offers can be availed across India. Below are the offers:
>SUV Loans (Mahindra brand) at interest rates starting 7.35%

>Up to 100% funding

>Loan tenure up to 7 years

>Buy now and pay after 60 days

>50% waiver on processing fees

>Pre-owned car loans at interest rates starting 12%

>Loan on tractor Implements at zero processing fee

>Quarterly and half yearly EMI for select customers for Car and Tractor loans

Punjab National Bank

PNB on Wednesday cut its gold loan rates by 145 basis points, and is now offering loans against sovereign gold bond at 7.20% and against gold jewellery at 7.30%.

The bank is also offering a full waiver of service charges and processing fee on the loans against gold jewellery and sovereign gold bond.

Earlier, the bank, as part of its festive offers, had announced a cut in home loan rate, which now starts from 6.60%, car loan rate, starting from 7.15%, and personal loan rate, from 8.95%.

ICICI Bank

ICICI Bank on Tuesday announced the launch of ‘Home Utsav’, a virtual property exhibition that digitally showcases real estate projects across cities. The exhibition will offer convenience to prospective home buyers as they can select their home by browsing through projects, approved by the bank, and avail benefits.

The offer is from October 7,2021, to December 31, 2021.

Attractive interest rate on home loans, special processing fees and digital sanction of loans and exclusive offers from developers are among the benefits that are being offered to the customers.

Furthermore, anyone, including those who are not customers of ICICI Bank, can avail of these benefits on buying a property through the exhibition, the bank said. Customers of ICICI Bank can further avail for the bank’s pre-approved home loan offers.



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Banks’ credit growth gradual in August, industry weakest link, says ICICI Sec, BFSI News, ET BFSI

Banking & Finance

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The overall credit growth of banks in August has been gradual from July, with signs of improvement only in pockets, ICICI Securities said in a report.

Industry credit continues to be the weakest link, dragging overall credit growth.

The industry, which comprises 29.2% of total non-food credit, was down 0.2% on month. Under-utilisation of existing sanction limits, modest demand outlook and run-down of exposure in few sectors were among the key factors, the brokerage said.

However, the brokerage expects industry credit to revive in the near future, given economic recovery from the COVID-19 crisis.

“We believe India Inc is now better positioned and confident to anvil on the path of re-leveraging. Indian financiers, too, have saddled themselves with ample liquidity to tap the emerging opportunity. Recovery in economic activity and the derivative effect of increased investments and corporate, government spending on consumption will sustain the momentum of more than 15% growth over FY22-FY25,” ICICI Securities said.

Also read: Banks’ credit outlook ‘stable’ for FY22, says Crisil Ratings

Credit extended for home loans has stayed put since March, up 0.8% year-to-date, while vehicle loans moderated to a 1% month-on-month accretion and is likely to pick up during the festive season.

Other personal loans also saw a strong momentum, up 18% on year.

With gradual easing of COVID-19 restrictions, credit card portfolio sales have risen 3.9% on month and 10.3% on year, witnessing the quickest recovery as business activity levels revived, the brokerage said.

Credit to non-food sectors was up a mere 0.5% on month and 6.7% on year, with agri and retail being the main drivers.

Retail credit is sustaining double-digit growth, but has not been robust, despite relaxation of COVID curbs, the brokerage said. The growth in retail credit was primarily due to the traction in vehicle and personal loans, and credit card sales.

Roads, airports, railways, iron and steel, cement, telecom and sugar are among the key sectors that are continuously deleveraging, the brokerage said.

“We believe industry growth will have to emerge as a key driver to boost credit growth in coming years. While it may happen with some lag, revival in consumer demand and rise in government spending can be potential triggers,” the brokerage said.

Credit to micro, small and medium enterprises was up 4% on month and 63% on year, the brokerage noted.

Lending to housing finance companies was up 21% on month, while loans to public public financial institutions was down 1% on year. After running down high risk assets, NBFCs are now pursuing growth opportunities in a risk-calibrated manner, the brokerage said, adding that now bank lending to NBFCs should stabilise.



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Delhi govt asks banks to integrate their vehicle loan data with VAHAN portal, BFSI News, ET BFSI

Banking & Finance

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Delhiites who have taken loans on their vehicles need not visit a bank or the transport department‘s office after October as the city government has asked the banks, financial institutions and NBFCs to integrate their vehicle loan data with the VAHAN portal of the Ministry of Road Transport and Highways. Any applicant who has taken a vehicle loan from any financial institution need not visit the bank or physically submit any document, according to a statement issued by the transport department on Monday.

“No physical documents needed for hypothecation of vehicles in Delhi after October 31,” it said.

Hypothecation is the process whereby the ownership of a vehicle taken on loan and held as collateral by a bank or a lending agency is restored to its buyer.

“We had, in the last month set a strict deadline to take all banks on board for integrating their data with VAHAN to allow termination on hypothecation services and I am happy to see that the process has picked pace and is nearly complete,” Delhi Transport Minister Kailash Gahlot was quoted as saying in the statement.

With this circular, the “no-objection certificate” (NOC) for hypothecation termination from banks and other financial institutions will be received only in the digital format at the VAHAN platform of the National Informatics Centre (NIC), the statement said.

Hypothecation services, including addition, continuation and termination on vehicle loans, are one of the most availed services of the transport department under its “Faceless Services” initiative launched in August.

Private banks HDFC and ICICI together account for 70-80 per cent of all the vehicle loans in Delhi and have already integrated their loan-related data with the VAHAN portal, according to the statement.

Delhiites need not visit a bank for the NOC as they can directly apply for hypothecation removal on the transport department’s website under “Faceless Services”.

Earlier, after the foreclosure of a loan, an applicant had to apply for termination of hypothecation and submit Form 35 and an NOC from the bank within 90 days.

The circular says from November 1, the banks or financial institutions that fail to integrate the data with the VAHAN portal would not be allowed to enter their data of hypothecation into the transport department’s database. PTI VIT RC



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Retail loans surpass industry loans for first time as corporates avoid banks, BFSI News, ET BFSI

Banking & Finance

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Retail loans continue to grow at a faster pace as loan demand from large corporates trips.

The outstanding retail loans are higher at Rs 28.6 lakh crore against Rs 28.2 lakh crore for industry that includes MSMEs and large corporates at the end of July. The outstanding loans to the services sector stand at Rs 26 lakh crore.

The growth rate of the retail/personal loans segment stood at 11.2% in July 2021, higher by 220 bps when compared with July 2020.

In absolute terms, credit outstanding has increased from Rs 25.7 lakh crore in July 2020 to Rs 28.6 lakh crore in July 2021.

The growth in retail loans has been driven by personal unsecured, vehicle loans and gold loan lending by some banks. The growth rate came in higher by 120 bps as compared with March 2021.

However, the retail/personal loans segment contracted on a sequential basis, but at a slower rate. The incremental credit growth to sub-segments contracted except for consumer durables and credit cards segment. The retail/personal loans segment has continued to be the second-largest amongst the four major segments with a share of around 26%.

Retail bifurcation

Within the retail segment, the housing loan with the highest share of 51.3%, slowed to 8.9% as compared with a growth of 11.1% in the same period of the last year. The housing loan segment was impacted due to the second wave of the pandemic, as there is no reasonable pickup seen in the housing segment. Credit card outstanding (share of 4.0%) registered a growth of 9.8% y-o-y as compared with a growth of 8.6% in July 2020, as discretionary spending was significantly impacted in the previous year due to the Covid outbreak.

Incrementally, retail/personal loans segment registered marginal growth. Within retail/personal segment, consumer durables, housing loans and loans against gold witnessed an increase, while the other segments reported a decline.

Industry loans

The industry segment witnessed a growth of 1% on YoY basis in July 2021, after witnessing a de-growth in previous month.

Large industries account for 80.5% share (83.8% share in July 2020) in the total outstanding credit to industries and this segment reported a drop of 2.9% in July 2021 versus a growth of 1.4% in July 2020.

The growth movement is weak as corporates continue to de-leverage and select large corporates access to bond markets. MSME industries grew by 21.3% in July 2021 (which partially offset the fall in large segments) as compared with a drop of 1.8% in July 2020. The growth in lending to industry and services was almost entirely led by the MSME segment, which was driven by disbursements under ECLGS scheme wherein Rs 2.14 lakh crore were disbursed up till date.

Of total 19 industries, six industries witnessed a drop in credit outstanding. Petroleum, coal products and nuclear fuels (share of 2.5%) registered the highest growth of 22.7% within industries (growth of 8% in July 2020). Rubber, Plastic, and their Products segment growth stood at 16.4% as compared with a growth of 7.4% in July 2020.

The infrastructure segment, which has the highest share of 38.3% in the total bank credit outstanding to industries, registered a growth of 2.4% in July 2021 as compared with a growth of 2.2% a year ago. Within the infrastructure segment, the airport segment registered a robust growth of 58.4% followed by the road segment at 29.7% in July 2021. While ports and telecommunication segments registered a de-growth of 21.9% and 13.5% respectively in July 2021 as compared with a growth of 17.3% and 19.6% respectively in July 2020.



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Collection efficiency of bank loans improves in June, BFSI News, ET BFSI

Banking & Finance

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Chennai: Banks witnessed an improvement in loan collection efficiency in June after states relaxed multiple lockdowns as the second Covid wave recedes.

For Equitas Small Finance Bank, collection efficiency for vehicle loans has come back to 89.3% in June, from 67.35% in May. While for microfinance loans, it is back at 66.9% from 63.6% and for small business loans it is back at 85.1% from 76.8%.

Its MD P N Vasudevan, “The Bank’s borrowers are largely in the informal segments dealing in daily use products and services which were temporarily disrupted due to the Covid-19 restrictions imposed. However, during June, states in the West and North experienced improved collection efficiencies as lockdowns eased while Southern states opened up towards the end of the month. We anticipate a sharp improvement in collections in the coming months as Covid wave recedes.”

For Indian Overseas Bank, the loan collection efficiency rate for small loans, vehicle and housing loans has improved to 85% between June and July from 70%-75% in May. The state-owned bank expects the recovery to be better in the September quarter, as it expects a large recovery of loans.

City Union Bank’s managing director N Kamakoti said that on an overall level, collection efficiency has recovered significantly in June as businesses have understood and adapted to lockdowns better.

A research note from Kotak on banks’ asset quality Kotak said that the recovery environment showed improvement in 1QFY22 though it is still not fully normal. There is likely to be more discussion on the recovery environment for 2QFY22 given the impact of the second Covid wave. Besides small loans, the report said it expects banks to provide a positive outlook on corporate recovery especially given a few large resolutions that have been completed/will be completed soon.



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