The slowing of import-export activities at the port of Kandla and at the country?s largest private port, Mundra, has severely hit the auto loan portfolios of the banks located in region of Kutch in Gujarat. Around 60% of the 1500-1800 truck loan borrowers in Kutch province have stopped paying their regular installments. The banks have thus seized over 300 trucks of the defaulters till-date and this delinquencies are expected to rise in future.
Mahesh Tirthani, secretary, Kutch Chamber of Commerce said, ?On an average, about 5000 trucks and tankers cater to loading and un-loading activities at both the ports in Kutch. This activity has come down by 40% presently and has substantially decreased the revenue of transport companies operating in Kutch.?
NH Pandhi, senior general manager of Dena Bank – a ?lead bank? deputed by the Reserve Bank of India (RBI) to oversee the credit financing on behalf of all state-owned as well as the private banks in Kutch region said, ?As recession across global markets have badly hit the trade activities at both the ports in Kutch, the business of local transport companies have dwindled. It has significantly increased the non performing assets of the local banks that have actively financed trucks and oil-carriers which cater to the transportation needs of both the flagship ports of Kutch.?
Pandhi said that almost all banks in Kutch have ventured actively into truck financing as it has proved to be a lucrative business for them. Each truck costing Rs 25-30 lakh of 15-30 tonnage capacity is usually financed up to 75% of its value at 14-15% interest rate over a period of 3-5 years.
?Thus pressure to repay the truck loans is enormous on the local transport companies and any downturn in their business operations tends to increase the repayment default rates,? he added. ?However, if RBI allows the local banks in and around Kutch region to offer a stimulus package to the transport companies by lowering the auto loan interest rates or deferring their loan repayments, the default rates would come down and the banks might be able to transact more business in the auto loan segment. Such an exercise was done by the RBI in the year 2001 when earthquake had hit the region.?
Pandhi said the doom economic scenario witnessed at Kutch?s ports have decreased the banking activity by around 50% . ?Before 2-3 months, we used to clear the cheques worth Rs 110-120 crore daily. Now, the average clearing amount is around Rs 55 crore per day,? said Pandhi.
During the last financial year, Kandla and Mundra ports witnessed the passage of cargo worth 64 million metric tones and 10 million metric tones respectively. Kutch Chamber of Commerce estimates that the cargo passage at both the ports could reduce by 30-35% in the current financial year.