The road to recovery for India's economy may just be
smoother. Rural financing (for vehicles and farm equipment), one of the most
critical indicators, has given economy watchers something to smile about. Small
finance banks like Utkarsh Small Finance Bank, Suryoday Small Finance Bank and
Fino Payment Bank.
Leading finance companies such as Cholamandalam,
Mahindra Finance, HDFC, L&T and Manappuram are seeing a 40 -60% higher collections and disbursements from their rural branches. At Kerala-based Manappuram Finance, one of the largest non-banking finance companies, with nearly 4,200 branches in 25 states, its chief executive VP Nandakumar said, "In June, disbursements went up 5060% from May, reaching 80-85% of pre-Covid levels due to demand for two-wheeler, tractors and entry-level cars. Collections have improved and 25% of those availing moratorium have started paying instalments in June." He expects this momentum to stay next quarter
Finance companies say they are loosening purse strings now,
thanks to the better liquidity position. "A good harvest as well as
faster recovery in the rural economy is giving borrow wheeler were confidence
to repay ongoing loans. We are seeing them paying up from June," said
Ramesh Iyer, managing director, Mahindra Finance.
Finance companies said disbursements for farm equipment and
two
Have been better than last year. "Even if the ticket
size of the vehicle has gone up due to the BS-VI transition, the need for
personal transportation is
forcing the rural consumer to opt for a new vehicle,"
said a senior official of a Mumbai based company.
Of the total 1,300 branches of Mahindra Finance, 1,120 have
opened till date, says Iyer, maintaining there is consistency in rural markets,
unlike urban. "Most of the company's rural branches in Uttar Pradesh,
Bihar and Rajasthan saw collections pick up in the last few weeks," he
added.
Financiers are optimistic of attaining normal levels by August-September
if this trend continues.
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