Magma Fincorp to Improve Tractor Loan Portfolio

Chief executive officer and president of asset finance business, Magma Fincorp Kaushik Banerjee said, "Magma Fincorp, a non-deposit taking and non-banking finance company, is working to increase the share of finance to used vehicles even as it wants to cut down the dependence on tractors from 27 percent to 20 percent."

“We want to ensure that the dependence on any particular segment is not more than 20 per cent for new loans,” he said about the derisking plans.

It lends to about 30,000 tractors on an annual basis. The loan recovery is a function of farmers getting a good price for the produce. Unlike other loans, tractor loan recovery happens only twice a year (bullet payment).

Successive droughts will hamper the paying capacity of farmers. Also, falling prices of commodities due to high production too will dampen the repayment, he explained about the tractor loan dynamics.

“Tractor segment is profitable but there is uncertainty in payments,” he said. Though the harvest last year was good, farmers did not have cash in hand due to demonetisation and this hit loan repayment across the industry, he said.

Telangana and Andhra Pradesh are amongst the top performing States for Magma Fincorp in terms of disbursements and portfolio quality.

“The various irrigation projects aimed at rural development have also fuelled the rural economy and will continue to see a boost even this year as reflected in the tractor volumes in 2016-17. Telangana and AP have recorded a year-on-year growth in tractor sales by 58 per cent and 48 per cent respectively in 2016-17,” Banerjee said.

Source:https://telanganatoday.com