New Delhi/Mumbai: India’s largest lender State Bank of India (SBI) is extending the repayment timelines for stressed automobile dealers by 15 to 30 days, allowing them more room amid slowing car sales, said a senior bank official.
Speaking to reporters in New Delhi, P.K. Gupta, managing director (retail and digital banking), SBI said: “Normally, the repayment period is 60 days. So we extend it for 75 days for some dealers and to 90 days for a few others.”
The bank has an exposure of ₹11,500 crore to auto dealers.
Gupta said that at the moment, some automobile dealers are facing difficulty in repaying existing loans as per schedule. “We are talking to each dealer and had meetings with all the industry majors and with Federation of Automobile Dealers Associations (FADA). We are very actively engaged with all of them on a case-to-case basis. We have been working out solutions along with other banks for dealers facing problems on account inventory,” said Gupta.
He summarised the current slowdown in the sector as a problem of inventory piling up at dealerships amid falling car sales. India’s passenger vehicle industry suffered its worst sales performance in nearly 19 years in July as sales fell 31% to 200,790 vehicles last month from 290,931 units a year earlier, showed data released by the Society of Indian Automobile Manufacturers (Siam).
“Our discussions with dealers’ associations suggest that the festive season is going to start soon and then they will be able to clear most of the inventory and most of the accounts may not turn into NPAs. But it will all depend on what kind of demand revival takes place,” said Gupta.
SBI on Sunday, like several other public sector banks, said in a statement that it conducted sessions with officials starting from the branch level to chalk out a roadmap for reviving credit. The rush for conducting these meetings is a result of a push from the central government asking banks to come up with suggestions on the future of the industry.
News agency PTI reported on Friday that the Finance Ministry has asked public sector banks to initiate a month-long consultation process with officers starting from branch level to seek suggestions for streamlining banking in order to help India become a $5 trillion economy in five years.
Gupta said that the consultation was conducted to review the performance of the bank on various parameters; to look at issues where bank has done well and at the areas where performance has not been up to the mark.
“The intention is a bottom-up approach. This conclave comprised branch managers all across the country and they were all overseen by the top management, starting from the chairman, the managing directors, deputy managing directors and chief general managers,” he said.
Areas specifically looked at in the conclave, Gupta said, included digital payments, corporate governance, and credit for micro, small and medium enterprises (MSMEs).
A statement from the bank said it collectively identified many implementable and innovative suggestions which can help to improve the bank’s performance and establish future roadmap.
“These suggestions were collated and have been sent to the regional/zonal level for further discussions at the state level bankers’ committee, along with comparative performance assessment of the branches in each region,” it said.