Led by commercial vehicle loans, the banking sector is seeing a significant improvement in the disbursal of vehicle loans in the post-Covid period.
This is the second consecutive quarter of growth from the end of June 2022 when such loans shot up 18 per cent compared to a decline of 3.5 per cent a year ago.
State Bank of India (SBI) saw a 20.5 per cent year-on-year growth in its auto loan portfolio during Q3 of fiscal 2023, while it was 39.5 per cent for the Punjab National Bank. Bank of Baroda and Indian Bank also recorded substantial growth in their auto loan portfolios, at 27.5 per cent and 27 per cent respectively. Among the private banks, ICICI Bank recorded a 22 per cent growth.
According to the Reserve Bank of India (RBI) data, the growth of vehicle loans on November 18, 2022, was 22.5 per cent, which is an indicator of the upward trend in the portfolio.
Why the surge
Despite the rate hikes a low-interest rate environment has made it more affordable for consumers to take out loans for purchasing vehicles.
Additionally, the government’s push for electrification of the automobile sector and the increasing availability of financing options for electric vehicles has also led to an increase in demand for vehicles.
In addition to vehicle loans, the overall retail lending was boosted by strong demand for home loans in many other banks.
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