A CRISIL study of rated securitised pools shows collections from commercial vehicle (CV) pools have improved driven by an increase in freight demand and lower diesel prices. However, the performance of tractor and construction equipment (CE) asset classes remains weak.
CV loans are the largest asset class being securitised in India. CRISIL has ratings outstanding on 44 CV pools securitised by 11 originators, aggregating Rs 106 billion in rated amount. The median monthly collection ratio (MCR) for CV pools improved to a strong 99.8 per cent for the quarter ended March 2015, from 98.1 per cent in the same period of 2014, and a three-year low of 94.4 per cent in the quarter ended December 2012.
On the other hand, performance of tractor pools remains weak. The median MCR for tractor pools dropped to 93.1 per cent in the quarter ended December 2014, from 94.7 per cent in the same quarter of 2013, due to delayed monsoons leading to lower crop output in major farming states. While collections have improved in March 2015, CRISIL believes this is on account of traditional, year-end focus on collections.
As for the CE sector, poor infrastructure and construction activity continues to be a drag on the asset quality of financiers.