State Bank of India (File Photo)
To help the auto sector tide over stress, the country's largest lender State Bank of India (SBI) has extended the credit period of automobile dealers that are facing demand slowdown and inventory build up.
"We are actively engaging with the auto dealers and in case of hardship faced by them the bank is extending credit repayment period on the case to case basis," SBI managing director (retail & digital banking) told reporters here on Sunday.
Normally the credit period is of 60 days but the bank has extended the same to 75 days in some cases or 90 days in others, he added.
As a bank, we can only focus on the financing side. Our main focus is make available funds at cheaper cost for those retail customers keen on buying cars. We also fund the dealers when they buy cars from the manufacturer. However, for the aspect of revival of demand, only government can step in," he said.
Gupta further said there has been a slight downturn in auto loans from the bank in recent months due to various reasons. The auto sector is facing its worst crisis in two decades and reports suggest thousands of job losses in the automobile and ancillary industry.
Around two lakh jobs have been cut across automobile dealerships in India in the last three months as vehicle retailers take the last resort of cutting manpower to tide over the impact of the unprecedented sales slump, according to the Federation of Automobile Dealers Associations (FADA).
As per Society of Indian Automobile Manufacturers (SIAM) figures, vehicle wholesale across all categories declined by 12.35 per cent to 60,85,406 units in April-June against 69,42,742 units in same period of last year.
On the other hand, as per data based on registrations collated by FADA, automobile retail sales in the April-June period declined by 6 per cent to 51,16,718 units in the first quarter of this fiscal as against 54,42,317 units in the year-ago period.
Passenger vehicles (PV) segment has been the worst hit with sales continuing to decline for almost a year now. In July, market leader Maruti Suzuki reported a 36.3 per cent drop in its domestic PV wholesales, while Hyundai saw a dip of 10 per cent.