rbi: Consider financing of two-wheelers in rural areas under priority sector: FIDC to RBI

Finance Industry Development Council (FIDC), a representative body of non-banking finance companies (NBFCs), has requested the Reserve Bank of India (RBI) to consider financing of two-wheelers in rural areas as part of priority sector lending. In a letter written to RBI Governor Shaktikanta Das on Friday, the industry body said two-wheelers play a critical role in rural economy as it helps in improving the standard of living, convenient and safer movement at affordable pricing and helps in increasing the earnings also.

“Considering the value and usage, we request the respected authority to consider the financial assistance to purchase two-wheeler in the rural economy as priority sector lending, as this will enable lenders to provide timely funds at cheaper cost,” the letter read.

Indian two-wheeler market unit sales stood at 21.2 million units in 2019 and would touch 26.6 million units by 2025, displaying a low CAGR of 2.6 per cent over the forecast period, it said.

The country’s rural market has a strong consumer base of approximately 74 crore people of which around 30 per cent own two-wheelers.

With the government’s push for improvement in rural road infrastructure and improvement in last mile connectivity coupled with two-wheeler OEMs focusing on grabbing market share, the long-term growth prospects for the two-wheeler industry look bright in the rural sector, the industry body said.

It further said the dearth of timely finance at affordable pricing remains one of the critical parameters because of which many of the rural consumers are not able to buy a two-wheeler, it added.