Auto loan cos warn of sharp rise in bad debts due to Covid-19 lockdown

Analysts say the Rs 4 trn auto finance industry was the most impacted and had the lion's share of asset quality deterioration during the quarter

Auto finance companies are expected to post a sharp rise in bad debts due to Covid-19-related shutdowns announced by various State governments in April and May. The auto loan business of Bajaj Finance--the first non-banking finance company to announce results for June quarter--has reported a sharp rise of 19 per cent in bad debts in the June quarter, led by defaults in the two- and three-wheeler segments.

Tata Motors Finance Ltd, a subsidiary of Tata Motors, has already warned that June quarter will be challenging for the company due lockdowns impacting collections and new business generation. TMFL disbursals were down