Car Loan: Purchasing a new car or motorcycle in India could soon be easier on the wallet. Buyers could be helped by lower interest rates and lower EMIs if the Reserve Bank of India intervenes. This festive period could spell relief for millions of customers who intend to buy their dream vehicle.
Relief Expected for Car and Bike Buyers
According to recent reports, car and bike loans may soon become more affordable. The Federation of Automobile Dealers Associations (FADA) has asked the Reserve Bank of India to look into delays made by private banks in passing on interest rate cuts. Public sector banks usually provide immediate benefits whenever repo rates are revised, but several private banks take longer, citing evaluation processes. This delay is reducing the overall impact of RBI’s monetary policy.
FADA’s Letter to RBI
In a letter to RBI Governor Sanjay Malhotra, FADA underscored that several private banks are restraining benefits in spite of rate cuts. They also pointed out the failure of banks in extending MSME-related benefits to car dealers. While dealers are covered under the Udyam portal, several of them fail to get facilities like reduced-interest loans and priority sector concessions. This has resulted in a policy-implementation gap.
Benefits to Dealerships and Workshops
Another important demand is to extend the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) scheme to authorized dealerships and service workshops. These businesses are currently not included in the scheme, even though they are a part of the auto retail universe. Including them under CGTMSE would ease funding woes for thousands of dealerships across India.
Push for Electric Vehicle Finance
Another key recommendation from FADA is to enhance credit availability for electric vehicles. Demand for EVs is picking up, particularly in rural towns and villages, but loans are still scarce. By providing cheaper loans for EVs, RBI can help the government achieve its green mobility objectives while facilitating customers to move towards green technology as well.
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