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File photo of a car showroom used for representational purpose only
File photo of a car showroom used for representational purpose only

Banks ready to lend for vehicle purchasing; funds are available: Uday Kotak

Kotak Bank CEO Uday Kotak also urged the government to address supply side bottlenecks being faced by the auto industry amid the coronavirus pandemic.

Noted banker Uday Kotak on Friday said there is no issue in terms of availability of money for vehicle finance and that banks are ready to lend for vehicle purchases.

Kotak -- Managing Director and CEO of Kotak Mahindra Bank, and President of industry grouping CII -- also urged the government to address supply side bottlenecks being faced by the auto industry amid the coronavirus pandemic.

Speaking at the special plenary session of the 60th annual convention of Society of Indian Automobile Manufacturers (SIAM), Kotak said the partnership between the government and industry is "key to coming out of the current uncharted times".

(Also read: Honda introduces car finance schemes in a bid to boost sales in Covid-19 times)

"At this time, I don't see any issue of availability of money, which is available in plenty. Banks are ready to lend for vehicles if there is a demand for that. So at this stage, I don't see there is any issue either on the rate of interest or the availability of money (for vehicle finance)," he said.

While emphasising that the banks are "ready, willing and eager to (finance)", Kotak said, "what we need to ensure is proper consumers with a reasonable credit history".

A very sharp reduction in interest rate which the RBI has implemented is a "positive", Kotak said, adding that MCLR rates are consistently coming down.

MCLR is Marginal Cost of Funds-based Lending Rate.

(Also read: Hyundai ties up with HDFC Bank for vehicle finance)

"Simultaneously, the bond market and the money market rates have also come down significantly. There is a lot of work that has happened on the monetary policy side already," he added.

Noting that the challenge is how do we get the supply and demand to move up, Kotak said, "the auto industry is facing supply side bottlenecks and there are disruptions to the supply chain due to lockdown".

There is a need for a seamless approach between the centre and the states so that the supply chain does not get affected, he added.

Kotak said that for the long-term, investments in road infrastructure without any friction is required to maximise the potential of the auto industry.

This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.

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