Per ET report, ""State Bank of India ( SBI )has suspended car loans for Ola and Uber taxis across multiple cities. This decision was taken in response to increasing defaults by drivers of the said cab aggregators. The bank has also seized close to 300 cars for payment defaults. As per the report suspension has been implemented in larger markets like Mumbai, Delhi and Bengaluru.
On the other hand, the drivers of these cab aggregators have been citing loss of income due to decrease in incentives offered by Ola  and Uber as the reason for not being able to repay to loan. The last and present year as well have seen endless strikes and protests for one or the other reason against the aggregators

Finally in April 2017, Uber India, filed a suit against taxi owners and drivers associations seeking USD1.9 Mn in damages for harming its reputation and the livelihood of drivers.

SBI currently has about USD 18.6 Mn investment towards such cabs. In a statement one of the top SBI executive said,

“We have stopped financing vehicles under Ola and Uber (select geographies) as have we decided to take a cautious approach…The suspension is temporary because we want to watch the situation for some time. There have been certain changes in regulations in many geographies and it’s prudent to see how it evolves before financing these vehicles again.”

Back in January 2016, SBI had launched a digital loan offering for merchants on ecommerce platforms. Starting with larger players like Snapdeal, Flipkart, Paytm, they later extended it to Uber in  March 2016, to provide vehicle finance for driver-partners on its platform.

As per the report, SBI has extended loans of about USD 9.3 Mn for owner-drivers operating under Ola with defaults at around about USD 2.5 Mn. On the other hand the vehicle financing portfolio for Uber stood has a 2% default rate. The bank is now recovering the money through auctioning of the seized vehicles.

“We had seized over 280 vehicles and we have auctioned about 80 and the remaining will be auctioned soon. Currently, we are seeing a 20% recovery in NPA accounts.”

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Ruchi Pandita

Ruchi is a word-weaver, a painter, an amateur photographer and a poet at heart. The ease with with she can explain the most complex stuff impresses people around her. Being a gemini, she is never content, always looking for new ways to explore her self and the world around. The startup revolution has greatly influenced her and she is using her talent to help budding entrepreneurs find the way forward.

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