India Ratings and Research (Ind-Ra) early delinquency index for CV loans measured by weighted average (WA) of over 30 days past due rose to 7.89 per cent in February 2018 in comparison to 6.87 per cent in February 2017. According to Ind-Ra sources, this was triggered by demonetisation, implementation of GST, migration to BSIV and tightening of overloading norms. Affecting used CV loan borrowers rather than the new CV loan borrowers owing to their weaker credit profile, the rise in fuel prices with no commensurate rise in freight rates is likely to further affect the operating margins of CV loan operators by seven to 10 per cent. Expected to further affect the environment for used CV loan borrowers, the performance of CV loans in Rajasthan, which contributes the highest share in the transactions as per Ind-Ra, is better than the median (over) 90 days past due delinquency of 2.47 per cent across states. Other key geographies such as Gujarat, Uttar Pradesh and Karnataka, which together contribute about 22 per cent of the portfolio as per Ind-Ra, have performed below par. CV securitisations are estimated to be Rs.150 billion with stable delinquency indices as per Ind-Ra. While the performance of new vehicle loans is improving, stress in used vehicle segment is growing.

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