Vehicle loans back in demand, show robust growth

The demand for vehicle loans has been witnessing robust increase tiding over negative growth last year. As per Reserve Bank of India data, vehicle advances of commercial banks grew 18 per cent year-on-year at the end of June 2022. In the same period last year (June 2021), disbursal of vehicle loans declined by 3.5 per cent.

“There was a dip in demand last year due to various reasons and adverse economic impact of the Covid-19 pandemic as well as supply chain issues for auto companies. But, we have an upward trend now which is expected to continue,” a senior SBI official told BusinessLine.

SBI, PNB see spurt in auto loans

For SBI, auto loans grew by 10.5 per cent in the first quarter ended June 2022 (5.84 per cent in June 2021). According to Atul Kumar Goel, Managing Director and CEO, Punjab National Bank, the preference being given by many to travel on their own after the pandemic has been driving the growth.

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For PNB, vehicle advances grew by 34 per cent in the first quarter of the current financial year compared to the same period last year. The spurt in auto loans is spread across almost all major public and private sector banks. For instance, in the first quarter of the current fiscal, ICICI Bank registered 17.6 per cent growth in vehicle advances.

“The demand for loans for private vehicles is greater than the commercial vehicle segment, which is yet to pick up. The impact of hike in repo rates by RBI also has to be seen going forward,’’ said an economist with a major public sector bank. “The cumulative dispatches of major brands of passenger vehicles showed about 30 per cent growth last month compared to previous month,” he said, adding that the trend may boost up demand for vehicle loans further.

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Vehicle loans back in demand, show robust growth