worst floods in a century that inundated large parts
of Maharashtra including its capital, Mumbai, seem to
have had little impact on auto loan repayments, as few
borrowers have defaulted on their payment commitments.
Thjis is revealed ina recent survey by rating agency
has analysed the impact of the recent floods in Maharashtra,
on the credit quality of 'asset backed securitisation'
(ABS) transactions backed by car loan receivables. CRISIL's
preliminary analysis reveals that there will be no impact
on the outstanding ratings of these transactions.
floods that hit the state on July 26, 2005, damaged
many cars and impacted their resale values, posing a
potential threat to the performance of ABS pools. Although
the complete impact of the floods can only be gauged
over a period of about six months, CRISIL has assessed
the immediate impact by analysing the collection and
delinquency patterns of CRISIL-rated car pools. The
pools have a principal outstanding of Rs13 billion including
about Rs.2.5 billion in Maharashtra. The analysis also
included discussions with all the major companies in
the car finance industry, for their feedback on collection
delays and their strategy for coping with the possible
rise in delinquency.
compared the performance of rated pools in the pre-flood
collection month of July 2005 and the post-flood collection
month of August 2005. The analysis reveals no substantial
difference in the monthly collection ratio (monthly
collection ratio (MCR) is the ratio of total collections
in a month as a percentage of the month's billings)
in the securitised pools in these payout months. Although
the MCR of securitised pools across India reduced marginally
from 102.7 per cent in July to 102.2 per cent in August,
the MCR for the contracts in Maharashtra remained stable
at 98.2 per cent in both months.
with the major players in the car finance industry indicate
no significant increase in delinquency levels. CRISIL
its dialogue with the major players, and its analysis
of collection and delinquency patterns, to assess the
full impact of the floods on the Maharashtra car loan