Automobile Dealers Seek Banking Support To Tide Through Sales Crisis

State Bank of India (SBI) has assured easing of liquidity in a bid to support dealers' business along with improving its service.

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State Bank of India (SBI) has assured easing of liquidity in a bid to support dealers' business.

Highlights

  • SBI has decided to ease the liquidity on the bank's side.
  • This will help resolve the liquidity crunch.
  • The bank has also promised to better its service for auto dealers.

The sales downturn in the Indian auto market has worried automobile dealers as they are the first ones to bear the brunt of the slowdown. In the last budget session, Federation of Automobile Dealers Association (FADA) had chalked out several demands to secure the business of dealers. One of the demands was also to ease of liquidity for easy flow of trade which was addressed by the government to an extent by easing of liquidity to Non-Banking Financial Companies (NBFCs). To further improve the situation, State Bank of India (SBI) had invited FADA and Mumbai Auto Dealers for a meeting in Mumbai on July 29 to put their heads together in a bid to resurrect the business.

Also Read: Budget 2019: Auto Industry Demands Budget Committee To Bring Down GST Rates

Among various other topics which were discussed, SBI has decided to ease the liquidity on the bank's side and increase in credit repayment days on a case to case basis. SBI further assured FADA of taking necessary steps to resolve the issues to reduce the burden of auto dealers. Speaking on the occasion P K Gupta, Managing Director- Retail and Digital Banking, SBI said, "The aim of the meeting with Mumbai Auto Dealers along with FADA was to understand the current industry situation and to take steps to ease the stress being faced by many dealers due to slowdown in auto sector. I am confident that the Auto Industry will bounce back soon in the forthcoming festival season. We at SBI are always there for Auto Retail Industry, specially our Dealer Partners to work in tandem with us in these tough times and beyond."

Relieved by the bank's approach, Vinkesh Gulati, Vice President, FADA said, "We thank SBI and its senior officials for proactively engaging with the industry representatives. Interaction with the bank was very positive and it will help us in planning in sync with the long-term future perspective of the industry. Such steps from banking institutions and as initiated by SBI give us a relief & confidence, which will help us to resolve our day to day issues and reduce unnecessary stress. FADA is highly satisfied with the steps taken by SBI and we hope that more such deliberations would continue to take place."

Also Read: New Car Registrations Down By 4.6%, Two-Wheelers By 5% In June 2019: FADA

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Liquidity crunch and low credit availability coupled with the increase in prices have taken a toll on customers' sentiments which in turn have subdued sales. That said, FADA's concerns go beyond the sales slowdown and earlier it had also raised several demands. It had asked government to include auto retailers (including workshops) in the MSMED Act 2006 and consider them as one industry. FADA has also requested to reduce the Corporate Tax for proprietary and partnership firms in similar lines to what the Government has done for new small Pvt. Ltd. companies with a turnover of up to ₹ 250 crores. In addition to these demands, the association has also asked to eliminate debit and credit card charges for auto dealers on transactions above ₹ 5,000 and exemption of Auto Dealers on Tax Collected at Source (TCS) in the course.

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