Mahindra and Mahindra Financial Services expect collection efficiency as well as loan disbursements to improve over the next two quarters with normalization of economic activities and only marginal impact of Omicron on the economy rural.
“Over the last two quarters, we are clearly seeing that growth is returning to normal and therefore disbursements are picking up. Over the next two quarters, we will begin to see growth in assets under management. Collection efficiency is also showing improvement,” said Ramesh Iyer, Vice President and Managing Director of Mahindra Finance.
In a statement on Friday, the company said business continued its momentum in January 2022, with disbursements up 31% year-on-year to ₹2,320 crore. Collection efficiency (CE) was 96% for January 2022, up year-on-year from 94% in January 2021, in line with expectations.
Market share spike
In an interaction with Activity areaIyer said Mahindra Finance has gained market share in tractors and there is also good traction in the used vehicle segment.
“We have once again regained our number one position in tractors. Demand for used vehicles is high, but availability is a challenge as people are not trading vehicles as new vehicles are not available,” he said. Iyer said he expects asset quality to improve and the trend of net NPA reduction to continue in the fourth quarter of the fiscal year.
In its third quarter results, Mahindra Finance had stated that it may be necessary to make an additional provision in the range of ₹500 crore to ₹1,500 crore in the fourth quarter of the fiscal year to bring the net NPA back to the IRACP standards below 6%. .
Iyer said stocking up on ₹1,500 crore would be a worst-case scenario. “If we are to bring the net NPA below 6% under IRACP, then we have stated that the provision we may have to take is ₹1,500 crore. So that’s the worst case scenario,” he said.
However, he expects that with better recoveries in the fourth quarter, there will be a further reduction in NPAs and the company may not have to set aside provisions of more than ₹500 crore to bring back the Net NPA below 6%.
February 04, 2022