Credit rating agencies bullish about CV loans
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.