Shares of State Bank of India (SBI) are trading lower by 0.5% after the bank announced that it would extend repayment period for stressed auto dealers.
The bank's MD PK Gupta stated to reporters, “Normally, the repayment period is 60 days. So, we extend it to 75 days for some dealers and to 90 days for a few others."
“We are talking to each dealer and had meetings with all the industry majors and with the Federation of Automobile Dealers Associations (Fada). We are very actively engaged with all of them on a case-to-case basis. We have been working out solutions along with other banks for dealers facing problems on account of higher inventory," Gupta added.
The bank has an exposure of Rs11,500cr to auto dealers.
The move comes in the wake of the ongoing strain in the auto sector. The sector has been facing a huge slowdown in demand owing to a variety of reasons.
India’s passenger vehicle industry recorded its worst performance in close to two decades in July 2019 with sales dropping 31% to 200,790 vehicles from 290,931 units a year earlier, according to the Society of Indian Automobile Manufacturers (Siam).
Several automakers have announced "no production days" to align production with sales.
Meanwhile, PSU Banks are also looking to revive credit flow.
State Bank of India is currently trading at Rs289.50 down by Rs1.45 or 0.5% from its previous closing of Rs290.95 on the BSE.
The scrip opened at Rs292.65 and has touched a high and low of Rs292.65 and Rs288.40 respectively. So far 49,67,494 (NSE+BSE) shares were traded on the counter. The current market cap of the company is Rs2,59,661.57cr.
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