RBI to make fresh strict norms to make repossession of vehicles easy

The Reserve Bank of Indian (RBI) has come forward to help the auto sector which has been hit badly by the recession, therefore working on this line the apex bank is considering of issuing a separate guideline for the banks and the non-banking financial institutions (NBFCs) so that they can easily repossess the vehicles from the loan defaulters.

Later this week Finance Ministry has called for the meeting which will be attended by the representatives of RBI, the banking industry and the automobile sector, among others and will be discussing about the structure of the new guidelines.

Industry sources told, “This will be the second such meeting,” and added that in present situation it is necessary to structure such guidelines to support financing of vehicles by banks and NBFCs.

The auto loan segment has been facing difficulty due to the continuing slowdown and more particularly by the unwillingness of lending institutions to offer loans for the purchase of vehicles.

Earlier on January 30 the representatives from the Finance Industry Development Council (FIDC) — the apex body of NBFCs — Indian Banks Association (IBA), Society of Indian Automobile Manufacturers (SIAM) and private banks had met in this regard.

FIDC Co-Chairman Raman Aggarwal told PTI that at this time there is a need to have a clear-cut guideline and a regulatory system for the repossession of vehicle from the loan defaulters.

“RBI has taken both conventional and unconventional measures to provide enough liquidity in the system... There are some structural reasons (for interest rates not easing immediately)... Over a period of time the rates will come down,” he said.

He said the central bank will continue to take steps in order to certain sufficient liquidity in the banking system, through conventional and unconventional measures.

Observing that a well-regulated banking industry has helped the country’s economy shield itself from the present global financial turmoil, he added central banks across the world are acting in concert to avoid such situation in future.

He added banks require more capital to survive in financial crisis therefore should pay more attention on capital-building in ‘good times’.