Two-wheeler sales in the region has dropped by 25 to 30 percent in the last two months. Auto dealers believe that the prime
cause behind the fall is the hike in interest rates and stricter recovery norms dictated by the Reserve Bank of India (RBI).
The banks have adopted stricter financing procedures, especially in disbursing loans to small customers. Some of the leading private banks have even discontinued granting loans for two-wheeler finance.
The auto dealers say that this has adversely affected their business and sales have dropped drastically. “Further drop can be witnessed in the absence of alternate means of financing,” says GP Pandey, a Bajaj agency owner.
A leading private bank, which has stopped granting loans, was financing 15-20 percent of bikes in the city. Hero Honda dealer Nitin Gupta says that Hero Honda has 45-50 per cent of the city’s market share of which about 70 percent were financed through bank loans. The sales are now plummeting following the scarcity of loans.
The decision to stop granting ‘insecure’ loans by the banks comes on the heels of the RBI guidelines against the hiring of recovery agents. Banks have now begun to be extra-cautious before granting loans. Some of the banks are even asking customers to sign a ‘defaulter agreement’ before granting loans. The agreement, declares the customer a defaulter even before the loan is granted.
The bank officials, however, contradict any such practice. “We are not aware of any such practice,” says Payal Aggrawal, assistant manger with a leading private bank.
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An Assistant Sales Manager at a TVS showroom S S Jauhri told Business Standard that the drop is being seen due to strict financing regulations even by the nationalised banks.
“The procedure for obtaining loan from the nationalised banks is tedious, lengthy and stipulates a number of requirements” he said.
Bajaj agency owner GP Pandey says that nationalised banks demand the last three years record of income tax filings and the creditor must have a permanent address for the last three years.
“These banks don’t even have a separate staff for disbursing loans unlike their private counterparts,” he added.