HDFC Bank plan to cut down auto loan in some States

Mr V.S. Ashok Khanna, HDFC bank’s Executive Vice-President and Business Head, Car and Two Wheeler Loans in an interview told Business Line that bank might lower its auto loan exposure in markets such as Delhi, Kerala and Uttar Pradesh following the State governments’ stand on repossession of vehicles in these regions.

“The Delhi police have issued directives asking customers having any complaints against recovery agents or collection agencies to call them on a toll free number. We are talking to the individual state governments; in case there is no change in policy, we will have to control our exposure in places like Delhi, Kerala and Uttar Pradesh,” Mr Khanna said.

The strict recovery norms and the strict clause on collection procedures have made the job of banks very difficult. He said there is fear among financiers which has made them cautious of lending.

In this year there has been a slowdown or even negative growth in the vehicle finance industry. He pointed out that these measures can lead to a further slowdown in the industry.

“There has been a slight increase in delinquency but it is not a cause of concern for banks. But what is more worrying is that such policies can turn customers paying their installments on time into willful defaulters. I anticipate further slowdown in the vehicle finance industry in 2009-2010,” he said.

As per the recent approximation by Crisil, the vehicle finance industry is approximately to register a negative growth of around 15 per cent in 2008-09, as against recorded Compounded Annual Growth Rate of 18 per cent between 2002-03 and 2007-08.