
In the current financial year, there’s a significant increase in the demand for vehicle loans, leading to a notable rise in the overall retail portfolio of banks during the third quarter.
Strong Growth in Vehicle Advances:
Data from major banks for the quarter ended December 31, 2023, and Reserve Bank of India (RBI) figures show a robust double-digit growth in vehicle advances.
Festive Season Boost:
During the festive season, especially in the third quarter (October – November 2023), there was sustained interest among new vehicle buyers, starting from the first quarter of the fiscal year, as mentioned by a senior SBI official.
Healthy repayments have encouraged bankers to lend more aggressively, considering vehicle loans as secured loans.
Bank-wise Performance:
- In the third quarter of the current fiscal year, auto loans for the State Bank of India (SBI) witnessed a robust 21% year-on-year growth, reaching ₹1,13,118 crore in outstanding value. The bank maintained a satisfactory level of Gross Non-Performing Assets (GNPAs) at 0.43%.
- Other major banks also experienced similar trends: 26% growth for Punjab National Bank, and 19.6% for ICICI Bank in the December quarter.
Ian Desouza, Chief Financial Officer of Bank of Baroda (BoB), highlighted strong growth in education, auto, and personal loans, with BoB experiencing a 24.3% increase in auto loans.
RBI Data and Projections:
RBI data show a 20.8% growth in the auto loan portfolio in the gross bank credit until November 7, 2023, reaching ₹5,64,785 crore. Bankers anticipate surpassing last year’s growth of 22%.
Impact of Digital Offerings:
Ease of processing and digital offerings play a significant role in boosting banks’ auto loan portfolios. For instance, ICICI Bank offers instant car loan disbursement for pre-approved customers, while HDFC Bank provides entirely digitally-driven processes and instant top-up loan facilities.