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Mahindra and Mahindra Financial Services expects collection efficiencies as well as loan disbursements to improve over the next couple of quarters with economic activities normalising and only a marginal impact of Omicron on the rural economy.
“For the last couple of quarters, we are clearly seeing growth coming back to normalcy and therefore disbursements picking up. In the next couple of quarters, we’ll start seeing growth in assets under management. Collection efficiencies are also showing an improvement,” said Ramesh Iyer, Vice Chairman and Managing Director, Mahindra Finance.
In a statement on Friday, the company said that business continued its momentum in January 2022 with disbursements increasing by 31 per cent year on year to ₹2,320 crore. The collection efficiency (CE) was at 96 per cent for January 2022, up year-on-year from 94 per cent in January 2021, in line with expectations.
Spike in market share
In an interaction with BusinessLine, Iyer said Mahindra Finance has gained market share in tractors and there is also good traction in pre-owned vehicle segment.
“We have once more regained our number one position in tractors. The demand for second hand vehicles is high but availability is a challenge because people don’t exchange vehicles as new vehicles are not available,” he said. Iyer said he expects asset quality to improve and the trend in net NPA reduction to continue in the fourth quarter of the fiscal.
Q3 results
In its third quarter results, Mahindra Finance had said it may require to make an additional provision in the range of ₹500 crore to ₹1,500 crore in the fourth quarter of the fiscal in order to bring the net NPA under IRACP norms below 6 per cent.
Iyer said that making provisions of ₹1,500 crore would be in the worst case scenario. “if we have to bring net NPA to below 6 per cent under IRACP, then we have said the provision that we may have to make is ₹1,500 crore. So, that’s a worst case scenario,” he said.
He, however, expects that with better collections in the fourth quarter, there would be further reduction of the NPAs and the company may not have to make provisions of more than ₹500 crore to bring the net NPAs below 6 per cent.
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