Vehicle loan demand continues to surge in Q3, boosting retail portfolio of banks

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Demand for vehicle loans continues to surge in the current financial year. pushing up significantly the overall retail portfolio of banks in the third quarter.

As per the numbers of major banks for the quarter ended December 31, 2023, there was a strong double-digit growth in vehicle advances, also indicated by the Reserve Bank of India (RBI) data. 

“This festive season, especially in the third quarter during October – November 2023, witnessed sustained interest among new vehicle buyers, which actually began from the first quarter of the current fiscal year itself,” a senior SBI official told businessline . 

“The repayments have been healthy which is also encouraging bankers to lend aggressively as they are secured loans,’‘ he added.

For the State Bank of India (SBI), auto loans showed a 21 per cent year-on-year growth in the third quarter of the current fiscal at ₹1,13,118 crore (outstanding) with a comfortable level of Gross Non-Performing Assets (GNPAs) at 0.43 per cent.

A similar trend is also seen in some other major bank’s businesses too in the December quarter – 26 per cent for Punjab National Bank, 46 per cent for India Bank and 19.6 per cent for ICICI Bank.

According to Ian Desouza, Chief Financial Officer of Bank of Baroda (BoB), education, auto and personal loans “are growing strongly”. BoB posted a 24.3 per cent spurt in auto loans.

RBI pegged auto loan portfolio growth in the gross bank credit till November 7, 2023) at 20.8 per cent with an outstanding portfolio of ₹5,64,785 crore. Once the full quarter is taken into account, it might surpass last year’s growth of 22 per cent, say bankers.

According to a senior economist with a private bank, ease of processing and digital offerings also boost banks’ auto loan portfolios .

ICICI Bank, for instance, has an instant car loan disbursement, an industry-first proposition, for pre-approved customers; delivery order is generated digitally in a seamless manner.

HDFC Bank, too, is offering an entirely digitally-driven process for new auto loans. It also offers an instant top-up loan facility where loans are credited to the account in less than 10 minutes after one applies on the mobile handset.