Banks focus on vehicle finance portfolio growth

STRONG DEMAND POST GST REFORMS

- KSHIPRA PETKAR & CHRISTINA TITUS

BANKS ARE LOOKING to expand their vehicle finance portfolios to capitalise on the improving demand for automobiles following the reduction in GST rates.

Before GST cuts,demand for automobiles had slowed, with therisein bank credit forvehicle loans coming down to 8.7% in August, from 8.9% in July, according to the RBI’s sectoral deployment data.

Theslowdowncan primarily be attributed to lower demand, higher delinquencies and uncertain resale values in the electric vehicles segment. But with the GST rate rationalisation, bankers have turned optimistic on this segment as they believe the reforms have improved consumption as products become cheaper.