The country’s largest lender State Bank of India has suspended car loans for Uber and Ola taxis across most of the country amid a rise in defaults by drivers with the cab-hailing firms.
The bank has seized close to 300 cars for payment defaults, which reflect lower earnings by drivers amid a surge in cab numbers and a decline in incentives paid out by the aggregators.
SBI, which has a total exposure of Rs 120 crore towards such cabs, had seen considerable stress in these accounts, people aware of the matter said. “We have stopped financing vehicles under Ola and Uber (select geographies) as have we decided to take a cautious approach,“ said a top SBI executive.
“The suspension is temporary be cause we want to watch the situation for some time. There have been certain changes in regulations in many geographi es and it’s prudent to see how it evolves before financing these vehicles again,“ the executive said.
There was no response to queries from Ola and Uber.
While suspension was implemented in larger markets like Mumbai, Delhi and Bengaluru, sources said a few disbursals continued in markets like West Bengal, Odisha and Hyderabad. SBI had stopped such loans in Bengaluru last year.
SBI has extended loans to the tune Rs 60 crore for owner-drivers operating under Ola with defaults at around Rs 16 crore. Its vehicle financing portfolio for Uber stood at Rs 70 crore with a lower delinquency rate of 2%. “Our total portfolio towards taxi aggregator vehicle financing has come down from Rs 130 crore to Rs 120 crore,“ the SBI executive said. “We saw delinquencies of Rs 15-16 crore in that portfolio.“ The bank is stepping up recovery from these accounts. “The recovery is happening through auctioning of the seized vehicles,“ the official said. “We had seized over 280 vehicles and we have auctioned about 80 and the remaining will be auctioned soon. Currently , we are seeing a 20% recovery in NPA accounts.“
Axis Bank suspended vehicle financing for Uber car loans last year. “We review the performance of various segments in our auto loans portfolio on a regular basis and exit some of the segments on the basis of their conduct,“ an Axis Bank spokesperson said in an emailed statement.
Uber and Ola drivers told ET they know friends and relatives whose cars have been seized by banks for non-payment of installments.[“Source-ndtv”]