State Bank Of India Tightens Lending Terms For Auto Dealers: Report

The State Bank of India (SBI) has tightened lending terms dramatically for auto dealerships, according to a source and an internal memo seen by Reuters, seeking to reduce its exposure to risk from a sector in the midst of a sharp downturn.

The shadow banking crisis that began to unfold in India during mid-2018 has deepened this year. The liquidity crunch in non-bank financing, higher insurance costs and rises in taxation have served to increase the pressure on the car sector, with monthly auto sales falling by 17-20 per cent since April.

Monthly passenger vehicle sales in June fell by the biggest margin in 18 years.

In one internal memo for financing dealers selling vehicles made by Hyundai Motor's India unit, SBI said it is revising the lending terms because of "growing stress" in the carmaker's portfolio.