Industrial slowdown to increase stress on commercial vehicle loans: Report

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Industrial slowdown to increase stress on commercial vehicle loans: Report
The continuing slowdown in the industrial sector along with weak private consumption and rising diesel prices are likely to increase the stress in the commercial vehicle loan segment through at least the first half of the next fiscal, says a report.

"Delays in industrial recovery and subdued private consumption expenditure will continue to put pressure on the freight demand of medium, heavy and light commercial vehicles till at least the first half of FY15," India Ratings said in a report.

It also said that if diesel prices continue to rise, the CV operators are likely to see their operating margins shrinking further. Last week, the government had hiked diesel prices by 50 paise per litre, excluding local sales taxes.

However, despite this the agency revised the asset performance outlook on CV loans to negative from stable with a negative bias and a stable outlook for those CV loans with asset-backed securities (ABS).

Dion Global Solutions Ltd.

Story first published: Tuesday, February 4, 2014, 9:10 [IST]
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