State Bank of India (SBI) has tightened lending terms for auto dealerships in an attempt to cut exposure to the troubled sector, as per media reports. PK Gupta, MD of SBI, spoke at length about the lending standards.
“Auto sales have been lower for the last 8-9 months. We are seeing a bit of a slowdown in the sector,” said Gupta on Tuesday.
“Therefore, we did issue an advisory to our branches to be careful while taking fresh exposure in this sector and at the same time we have been actively engaged with all the auto majors and auto dealers across the country,” he added.
Taking further about meeting auto dealers, Gupta said, “We are working them to see that they are able to take care of the issues they are facing.
“As a bank, we need to be careful about the exposure; how ultimately it gets exposed, all the risk mitigation measures that we need to be taken but there have been no cases where we have denied credit to anybody,” added Gupta.
“We have been engaged very actively with the auto majors, in fact, all of them; the auto majors and the dealers have been appreciative of the proactive steps that the bank has taken in this regard so that there is no stress,” he further added.
Speaking about the inventory decline, he said, “The feedback which we are getting is that the people are waiting for the festival season to kickoff. They do expect that the inventories which they have piled on, will get cleared and we expect that in the coming holiday season a lot of these issues will get sorted out and soon we should be getting back to normal.”