BackRBI should classify NBFCs as an essential service: Umesh Revankar
RBI should treat non-banks at par with banks by including them as an essential service, says Shriram Transport Finance CEO Umesh Revankar
PremiumWith the nationwide lockdown disrupting truck movement across the country, truck financiers are trying to help their customers deal with the crisis.
Shriram Transport Finance, the largest financier of commercial vehicles in India, said its focus right now is to reach out to truck drivers who are currently stranded at different places because of the lockdown. In an interview, Umesh Revankar, managing director (MD) and chief executive officer (CEO), said that the Reserve Bank of India (RBI) should treat non-banks on par with banks, by including them as an essential service. Edited excerpts:
What is the situation on the ground?
There is a better understanding now. Governments are allowing truck movement. We are slowly getting back to normalcy. The understanding of district administration at various levels was not proper. They felt that all trucks are non-essential. Even a truck carrying polythene bag required for packaging is not considered an essential item. This understanding is not there. Whatever a truck carries becomes essential. A truck can be free to carry only when it becomes free again. It may carry a steel rod one way and on return, it may carry vegetables. This is where the entire supply chain is essential for the country. This understanding is not there. Now, slowly, everybody is realising that.
What is your focus at this moment?
At this moment, we are not able to contact customers physically. So, we are focussing on contacting customers through mobile and getting their feedback, trying to advise them and give suggestions. So it’s virtual working from home in most of cases.
At the same time, we have requested RBI that we should be treated like banks and be allowed to function like banks as an essential service. Other than opening of accounts, we do all the services that banks do like opening deposits.
How are you implementing the RBI dispensation on repayments?
We are telling borrowers, if you have means to pay, please go ahead and pay, rather than seeking a moratorium. He has to pay interest on that. The more he delays, then loan remains outstanding for longer.
Is it a blanket moratorium on instalments?
It’s not a blanket moratorium. The customer has to seek for it. Some customers may say they have the means to pay. That is also a possibility.
How are you seeing the cash flows of your borrowers?
Cash flows depend on the movement of truck. It’s too early to comment on that. Right now, everybody is stuck. They haven’t reached their destination. Once they reach their destination, repayment will come. Then they will take the second trip. It takes time.
How are you going about making collections?
We are focussing on digital collections only. Only those having digital payments capability will continue to pay. If they don’t want to pay, they have to inform us. They have the option to pay through any digital mode through wallet or bank’s direct transfer or real-time gross settlement (RTGS).
Do you see demand for new loans?
Right now, there is no traffic. All regional transport offices (RTOs) are closed. Used vehicle transaction means hypothecation, transfer, etc. All those things need to be done. Since RTOs are closed, no transaction.
What could be the impact on your earnings?
No impact on profit and loss if we are going to avail of the moratorium and if banks we have borrowed from are going to give the moratorium, it is not going to have an impact.
Do you think funding will be a challenge for non-banking finance companies (NBFCs)?
Don’t think funding will be an issue. Liquidity in the system is good. Immediate credit demand is not huge. Naturally, NBFCs’ ability to borrow from banks will be good.
How is the liquidity situation for NBFCs?
Right now, whatever borrowing we have to do in March, we have done. Next quarter, we have to plan. Right now, liquidity is good. We keep a three-month lending requirement. So, we are not in a hurry. Once the situation is clear, raising capital is not an issue; it’s a routine affair.
How are you dealing with your securitized portfolio?
In a true sale arrangement or securitization deal, when I sell a pool to banks, if the customer has not paid, then the returns won’t go to banks. What banks can do is they can encash the additional 10% cash collateral if they wish to for two months. Banks have that liberty. But in true spirit, banks should give the moratorium. In no case we can fund it. Each bank will have a different view, so we need to understand how they would like to take it forward.
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