Credit rat­ing agen­cies bullish about CV loans

Commercial Vehicle - - NEWS -

Credit rat­ing agen­cies ICRA and Moody’s In­vestors Ser­vice are bullish on the re­cov­ery of Com­mer­cial Ve­hi­cle (CV) loans. The op­ti­mism is based on an­tic­i­pa­tion of a good mon­soon in the coun­try. Hit hard by the the de­mon­eti­sa­tion drive in Novem­ber last year, ICRA is hope­ful of a re­vival in the ru­ral econ­omy, which in turn is ex­pected to lead to growth in trac­tor and mi­cro fi­nance loans. Moody an­a­lysts pre­dict that the nor­mal mon­soon will re­sult in higher freight avail­abil­ity, and im­prove­ment in fleet util­i­sa­tion. This will sup­port freight rates, and lead to a re­cov­ery in CV loans. The re­cov­ery in CV loans will be likely com­ple­mented by healthy eco­nomic ac­tiv­ity and sta­ble diesel prices. Blam­ing the cur­rent stress in trac­tor loan re­pay­ments on de­mon­eti­sa­tion, the two agen­cies ex­pect good growth im­pe­tus from the coun­try’s agri­cul­tural sec­tor. ICRA es­ti­mates that 50 per cent of the lend­ing will be sourced from the ru­ral sec­tor. It also ex­pects col­lec­tion ra­tions to im­prove up to 95 per cent lev­els over a six month pe­riod.

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