Banks are witnessing a five-year record surge in vehicle loans and expecting greater traction in the ensuing festive seasons.
“Last five months have been quite good for vehicle advances. The demand for loans in the second quarter so far has been showing the same trend. We expect further uptick in the ensuing festive season from the third week of September onwards,’‘ a senior SBI official told businessline.
As per Reserve Bank of India (RBI) data, vehicle advances registered a record growth in the first quarter of the current fiscal and crossed Rs. 5 lakh crore mark in June.
They grew by 23 per cent at Rs. 5.23 lakh crore in June this year compared to the same period last year. An analysis of last five-year’s data shows that the growth in vehicle loans was at its peak in the first quarter this fiscal.
For instance, compared to 23 per cent growth in June 2023, vehicle advances posted 18 per cent in June 2022 while the same was at 11 per cent and 7 per cent in June 2021 and June 2020 as per RBI data.
The growth is being driven by a variety of factors, according to a senior official of Punjab National Bank. “There has been a general increase in sales of the automobile industry for the last one year as reflected in industry data. Apparently, a major part of that interest comes to banks in the form of demand for vehicle advances,’’ he said.
For PNB, Vehicle loans increased by 27.1 percent in the first quarter to Rs. 17,093 crore compared to the same period last year.
According to data of Society of Indian Automobile Manufactures (SIAM), sales of Passenger Vehicles of July 2023 has been the highest ever in July, with a marginal growth of 2.6 per cent compared to July 2022.
Three Wheelers also posted a decent growth of 78.9 per cent compared to the last year, which is the second highest in the month of July, after the peak of 2018-19. The total production of Passenger Vehicles, Three Wheelers, Two Wheelers, and Quadricycles in July 2023 was 20,87,087 units.
Both banks and vehicle dealers are also lining up various schemes with discounts in interest rates, processing fees of loans and vehicle prices to lure buyers over next two months.
