After a total lockdown, where virtually all vehicles were immobilised for some time, transport of essential and non-essential commodities has been allowed.
By Hariprasad Radhakrishnan
There may be concerns around the asset quality of non-banking financial services companies as a nation-wide lockdown has been announced for 21 days. But Umesh Revankar, MD & CEO, Shriram Transport Finance, tells Hariprasad Radhakrishnan that there could be a delay in paying EMIs but the customer will eventually pay. Revankar also believes that disbursements would pick up in June and the latter part of May, while April would witness subdued growth due to the lockdown. Excerpts:
What would be your assessment of the impact on the business environment due to Covid-19?
In this business environment, the demand will be comparatively less. We are now focused on customers’ revenue and the operation of their businesses. Slowly, things are becoming positive. After a total lockdown, where virtually all vehicles were immobilised for some time, transport of essential and non-essential commodities has been allowed. We should be able to come back on track once the customers’ revenue is stabilised.
What is your company’s strategy to tide over the present crisis?
The strategy is to stay in touch with our customers. As long as a customer is running the business, they have specific requirements like working capital, insurance renewal, or funding for fuel requirements. As long as the customers are healthy, we are healthy. We have also created a task force to monitor the operation.
Do you foresee problems in the asset quality in your company and for the sector as a whole?
No, I don’t foresee problems in asset quality. There may be delays in realisation of revenue, which will result in delay in payment of EMIs, but the customer will ultimately pay. Following the RBI’s measure to provide moratorium, we will give the option to the customers to avail moratorium. It is the customer’s choice if they want to take it and pay interest on that.
What is the trend in repayments after the start of the pandemic?
During March, we were not impacted much as the lockdown was imposed after March 20. But there were some delayed payments that could not reach us. Many people who would have paid couldn’t because of a number of factors. The first 15 days of April are more important when there is a total lockdown and cash transactions are weak.
Do you expect growth in disbursements to be muted, going forward?
I think the disbursements will pick up in June and second half of May, but it will be subdued in April. As of now, the regional transport offices are not functioning; so we cannot disburse as hypothecation has to be done before. Further, our offices are not open. We have requested the government and RBI that we should be allowed to function just like banks. We shall take precaution of social distancing and can function normally. The customer service should not be impacted and, moreover, we are a deposit-taking NBFC, which has the responsibility to pay maturity and interest obligations on time.