Signs of weakness emerging in CV loans: Crisil Ratings

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26 Aug, 2025 12:21

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Moneycontrol Bureau

After the big ticket corporate loans, it is time for the small-size retail borrowers who are likely to give some asset quality bouts to Indian lenders. First time in three years, signs of weakness are emerging in the performance of retail assets, observed the rating agency Crisil.

"Delinquencies in commercial vehicle (CV) loans are increasing, with monthly collection ratio (MCR) of CRISIL-rated CV pools dropping below 95 percent for the first time since 2009. This decline in collection efficiency indicates that borrowers are increasingly delaying repayments; there is, therefore, a likelihood of increase in non-performing assets (NPAs) over the next few quarters," said a report released on Monday by Crisil Ratings.

However, the weakness is only felt in the CV credit. The performance of other retail asset classes including housing loans, car loans, and microfinance loans, remains stable. The latest data by the Reserve Bank of India (RBI) showed, auto loans were up by 21 percent in 2012-13 as against 18 percent in 2011-12. housing loans grow at faster pace at 14 percent from 11 percent a year back.

The performance of heavy CV loans, according to the report, is the weakest due to three reasons: a sluggish economy, industry overcapacity and increasing input costs. Heavy CVs are generally used for industrial purposes.

The median monthly collection ratio (MCR) ratio of CRISIL-rated securitised non-mortgage retail pools declined to 94.4 per cent for the quarter ended December 31, 2012, from 96.2 percent for the corresponding quarter of the previous year.

"A portfolio analysis of the leading non-banking financial companies (NBFCs) that lend to the CV segment reveals that delinquency in near-term buckets is rising. The 90+ days past due levels, an indicator of loans not repaid for more than 90 days, has increased by about 100 basis points over the three quarters ended December 2012," said Pawan Agrawal, Senior Director, CRISIL Ratings.

However, he clarified to moneycontrol.com that it did not indicate that situation is good for commercial banks. It is just a quantification, which was easily available.

CRISIL has ratings outstanding on 80 securitised CV pools, aggregating Rs 17,700 crore in rated amount. These pools primarily contain vehicle assets, including loans provided for purchase of heavy and light CVs. These loans have been originated and securitised by eight leading NBFCs.

saikat.das@network18online.com