Shriram Transport Finance Corporation maintains its loan disbursement target of 15 percent this fiscal. Speaking to CNBC-TV18, Umesh Revankar, MD, Shriram Transport Finance Corporation, says the company is witnessing a significantly strong credit demand in northern belt, particularly in the states of Uttar Pradesh and Bihar.
Furthermore, he expects asset quality to improve in the second half this year on the back of considerable rise in demand for commercial vehicle.
On monetary policy, Revankar says an increase in consumption and credit growth could drive Reserve Bank of India to cut rates by 25 basis points in the next policy meet.
Below is the verbatim transcript of Umesh Revankar’s interview with Ekta Batra and Reema Tendulkar on CNBC-TV18.
Reema: Policy rates unchanged, statutory liquidity ratio (SLR) unchanged and cash reserve Ratio (CRR) unchanged anything in the policy that stands out for you?
A: Nothing much, we also did not expect rate to change because I expect unless the credit growth picks up and banks started reducing the rate and the Reserve Bank of India (RBI) may not react is what it looks like and credit growth is very important for banks to improve their top-line and bottom-line both. So, credit growth unless it picks up and the consumption and the overall demand go up the kind of expectation of transmission may not happen is what we feel. So, maybe we are hopeful that by next policy we will see some kind of a credit growth in the overall market and that should determine the policy rate to come down by atleast 25 basis point.
Ekta: Assets under management (AUM) as well as disbursement growth had picked up a tad bit in the previous quarter for Shriram Transport. How is it looking this quarter?
A: This quarter is quite good I should say because October was good for us; November looks little dull as far as credit growth is concerned. However, again the proposal levels if you see there is a quite a good demand. I see lot of demand in the northern belt and first time I am seeing northern states like Uttar Pradesh (UP), Bihar and all where the credit demand is quite strong. Only the west seems to be little weak especially in Maharashtra. Otherwise rest of India the credit demand for commercial vehicle is quite good.
Reema: So disbursement growth which is nearly 10 percent quarter-on-quarter (Q-o-Q) is would be how much in Q3 roughly?
A: It should be on same line. Normally the second half of the year is better than the first half. So, it should be around 45-55 if you look at. So, if you look at that may be this two quarters should be reasonable good for us. We expect to reach our initial guidance of 15 percent growth.