According to a recent revelation, decline in the recoveries due to the meek property market and an increase in the number of wrong-doings has adversely impacted loan against property (LAP) segment for the financers. On the other hand, segment such as loans for commercial vehicles has been performing relatively well as compared to before.
As per a recent report, the number of offences in the LAP market has witnessed a rise and the percentage of overdue loans have increased to 1.77 percent in January 2019. It was 1.05 percent a year ago. High loan-to-value and high-yield buckets are considered to be the primary reasons for such delinquencies.
Contrary to the LAP segment, the delinquency index for the commercial vehicle loan reduced from 8.19 percent to 7.53 percent in January 2019. Some of the major reasons that have contributed to the said decline are an uptick in freight rates and changes in the Government norms such as revised axle load norms. These factors have significantly contributed to the cash flows resulting from optimum asset utilisation. Reportedly, new vehicle loans have performed better in comparison to the used vehicle loans.
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