Kotak Mahindra Bank is seeing some stress on its loans to the commercial vehicles, construction equipment (CVCE) industry.
The bank’s President and Group CFO, Mr Jaimin Bhatt, told Business Line that while there were some incipient signs of a build up of non-performing loans in the ‘commercial vehicles’ sub-segment, the bank had actually booked some NPAs in the construction equipment area.
Kotak Mahindra Bank has a loan exposure of about Rs 8,200 crore to the CVCE industry.
When small truck operators delay paying their loan instalments, it means there is something wrong in the system, Mr Bhatt said. (For the small truck operator — who might own one or two trucks — the vehicle(s) are the only source of livelihood, and therefore he would worry about the vehicle being seized. Hence, if that borrower does not pay, it is because he is unable to.)
No restructuring business
Mr Bhatt said that following a “if there is a problem, recognise it” philosophy, Kotak Mahindra Bank does not believe in restructuring loans. The total restructured loan book is just Rs 12 crore — 0.03 per cent of the loan book. (In most banks, this number runs into thousands of crores.)
During the first quarter of the current year, there was one “chunky corporate account” that turned bad. The exposure to this borrower has been put at “between Rs 50 crore and Rs 100 crore”.