Seeing demand uptick for second-hand commercial vehicles; eyeing 7% NIM: Shriram Transport Finance

On the net interest margin (NIM) front, Revankar said that the company is eyeing 7 percent. He said, “We have been always looking at 7 percent net interest margin. It has come down to 6.45 because of higher liquidity, which we are carrying on the balance sheet because of the uncertainty in the overall market.”

On freight rates, he mentioned that the rates have corrected and margins have only improved for customers. He said, “The margin for the customer has improved because there was some decrease in excise duties and fuel price came down. So there was temporarily higher margin for the customer and then the freight rate got corrected because it is linked to fuel price.”

On credit cost, Revankar said that the figure was around 2 percent and he hopes to further improve it by around 15-20 basis points. He explained, “The credit cost in our long-term average is around 2 percent and as long as we are around that, we are comfortable. So the gross NPA is not an indicator for the stress level in our portfolio.”

On the GNPA front, Revankar said that he isn't worried. He explained that collections in December were above 100 percent. According to him, his customer base largely consists of individual operators, who may see delays in payments. He said, “The kind of customers whom we are lending are individual operators and all of them have to earn and pay and there will definitely be some delay in their collections because of the corporate or any entity they depend on for timely payment. Therefore, it is not because of any stress in their operations.”

For the full interview, watch the accompanying video