Lockdown hits three-wheeler loan segment

In December 2019, Venkatesan, 48, an autorickshaw driver in Chennai, took a three-wheeler loan from a public sector financial institution. He paid the primary three instalments earlier than his enterprise got here to a standstill in March 2020 after the lockdown to regulate COVID-19 started.

“I did not want to go to a financier so I opted for a bank loan, which I got with great difficulty. Since March 2020, business has not been so good and I skipped payment of monthly instalments,” he stated. The scenario turned a bit higher at first of this 12 months, and “I managed to pay some money back but I’m stuck again with the second lockdown.”

Like Mr. Venkatesan, there are a number of autorickshaw drivers throughout Tamil Nadu who borrowed from banks to purchase automobiles, however are unable to repay the loans. Data from numerous sources present the utmost excellent loans are within the areas of Kancheepuram, Thiruvallur and Chennai. They are adopted by Coimbatore and Salem.

According to the information from CRIF High Mark, a credit score data firm, excellent loans within the three-wheeler segment within the State elevated marginally to ₹5,973 crore on the finish of March this 12 months from ₹5,859 crore on the finish of March 2020. Loans in default for 91-180 days stood at 6.89% as of March 2021, up from 5.47% in the identical interval final 12 months. The non-performing belongings within the three-wheeler class have been the best, in contrast with different classes corresponding to automotive and two-wheeler loans.

With colleges and schools closed and individuals who in any other case commute working from dwelling, autorickshaw drivers are getting only a few rides after the pandemic began. Not simply that, individuals are utilizing their very own automobiles for commuting. “A few autorickshaw drivers ventured into selling vegetables and tea through their vehicles; with the money thus earned, they managed to repay loans. Some drivers took to other jobs to repay the loans,” stated Ramesh, who has been driving an autorickshaw in Chennai for over a decade. “But this formula does not work for everyone, so many have defaulted,” he stated.

While banks are restructuring some loans, not all drivers are conscious of the programme as they haven’t visited the banks for concern of being questioned.

A senior official of Indian Bank stated non-performing belongings had marginally gone up because the debtors have been affected by the financial affect of COVID-19. “Compared with the last financial year, there has been a drop in new sanctions [of loans] owing to the pandemic and the lockdown,” he stated.

The financial institution is offering numerous Government of India-guaranteed credit score strains, just like the Emergency Credit Line Guarantee Scheme. The moratorium was prolonged in March 2020 to August 2020 as per the Reserve Bank of India’s tips.

Indian Overseas Bank stated the demand for three-wheeler loans got here down drastically after the lockdown began. It sanctioned ₹0.5 crore in 2020-21, as towards ₹0.96 crore within the comparable interval final 12 months. Demand had not picked up due to the second wave of the contagion, the financial institution stated. However, it stated non-performing belongings had not gone up within the segment. Both banks stated they have been restructuring the loans.