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Current auto slowdown will not create NPAs: SBI

State Bank of India is trying ensure availability of credit to car-buyers, and at low interest rates.

, ET Bureau|
Aug 18, 2019, 05.48 PM IST
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NEW DELHI: India's largest lender State Bank of India has said the current slowdown in the country's auto sector will not create non-performing assets for the banking sector.

A top executive of the bank said the lender is trying ensure availability of credit to car-buyers, and at low interest rates.

“I think it will be difficult to say at this point of time (whether there will be NPAs in the auto sector). We have seen some cases of dealers having excess inventory, and we have been working out solutions for them," said P.K Gupta, managing director (retail and digital banking), SBI said while addressing a press conference here on Sunday.

Auto sales in July this year fell to a 20-year low, and at the current monthly average sales, total projected annual sales of passenger vehicles for 2019-20 may drop to yearly sales levels seen in 2014-15 and 2015-16.

In the first seven months of 2019, passenger vehicle sales dropped 13.2% to about 1.76 million units, according to data from the Society of Indian Automobile Manufacturers (SIAM).

This has worried policymakers who are now looking at working out a package for the sector.

"The dealers associations feel that they will be able to clear their inventories during the festive season, and most of these accounts may not actually turn into NPAs. But, it will all depend on what kind of demand revival happens,” Gupta said.

Gupta said that the bank is holding regular consultations with auto dealers and dealers’ associations who feel that the upcoming festive season will revive the demand for the auto sector.

The state-run bank organised meeting across its 524 regional business offices over the weekend, to review the bank’s performance over the last five years, identify sectors which needed increased credit, and means to digitise its functioning.

The meeting comes in the backdrop of a directive from the finance ministry asking public sector banks to review performance even at the branch level.

Sectors including MSME, retail, agriculture and green economy will see increased flow of credit, Gupta said.

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