Mumbai, July 30 (IANS) In the wake of a subdued consumption-led slowdown in the auto industry, lending major State Bank of India on Tuesday said it had modified its credit norms for financing of automobile dealers and vehicle loans to individuals, "so as to ensure that the sector does not face any stress".
The lender, which had changed its credit norms in January 2019, said that it is continuously reviewing its exposure to the sector and is "actively engaged" with auto majors, dealers and the industry associations like Federation of Automobile Dealers Associations (FADA).
"The bank in consultation with auto majors has taken steps to provide support to the dealers for inventory funding by them to tide over the current phase," a SBI spokesperson said.
"The bank is committed to take any further steps necessary in this regard."
On Monday, SBI's senior management and FADA officials met in Mumbai to discuss the problems faced by the industry.
Lately, heavy tax rates, farm sector distress, stagnant wages and liquidity constraints have culminated into a consumption downtrend which has impacted the jobs market.
Sectors such as automobile has been hit the hardest due to the downtrend. Consequently, the inventory levels with automobile dealerships have exponentially increased.
Figures from the Society of Indian Automobile Manufacturers (SIAM) showed that domestic passenger car sales in June went down by 24.07 per cent to 139,628 units.
In the commercial vehicle segment, domestic sales were down by 12.27 per cent to 70,771 units last month.
Additionally, overall sales of two-wheelers, which includes scooters, motorcycles and mopeds, edged lower by 11.69 per cent to 1,649,477 units.