Coronavirus Impact: Rural Demand Can Still Be Saved, Says Mahindra Finance’s Ramesh Iyer
India’s rural demand story can look green at a time when the Covid-19 pandemic has halted most production and consumption in urban India.
That’s according to Ramesh Iyer, managing director at Mahindra & Mahindra Financial Services Ltd. Acknowledging that the situation in rural India isn’t as bad as in the urban areas, he said a good harvest season could lead to decent demand.
“April-May harvest season when that income comes into the hands of the people and if monsoon is normal plus, I think the rural story would look much greener and positive,” Iyer, who is also chairman of Finance Industry Development Council—a representative body of non-bank lenders, told BloombergQuint in a interview.
Iyer’s comments come two days into a three-week India lockdown effected by Prime Minister Narendra Modi to control the spread of the novel coronavirus. The Covid-19 disease has so far infected more than 600 Indians and claimed 13 lives.
With social distancing being advised for all, most factories have halted production. Factories making essential goods and products that need continuity are an exception.
Automakers—with cars and bikes one of the key NBFC disbursements—are among those that have taken the hit. “We were hoping demand would tick up in the next festive season after BS-VI comes in and people start accepting the price,” Iyer said. “Now, with the impact of virus, it may get stretched.”
When asked about the industry collection, he said that they have reduced overall. Iyer hopes the government makes regulatory amendments, pushing non-performing asset provision to 120 days of non payment from the current 90. “We’re waiting for directions.”
He clarified that it’s not that customers are completely out of money, but that the circumstances are holding people back from discharging their liabilities.
“So far as regular paying customers are concerned, my take would be that it would be inappropriate to even call and ask them when we know it is purely circumstantial reason and therefore one has to carve that out very separately,” he said.
“These are times when one has to not look at growth and asset quality. These are the times when one has to work very closely with every stakeholder and try and find some common solution instead of some individual business solutions,” he added.