GST, falling property prices push NPAs in LAP, CV loans

Implementation of the goods and services tax (GST) and falling property prices continue to drag loan against property (LAP) and commercial vehicle loans segments, leading to higher delinquencies, says a report.

The weighted average 30-days-past-due (dpd) delinquency rose 160 basis points year-on-year to 4.07 per cent in February, indicating that institutions are yet to align their strategy in respect of the LAP segment, India Ratings said in a report today. "The recently originated collateral-backed loans to the micro, small and medium enterprises' LAP loans have continued to surge on all delinquency indices following a drop in property prices and GST implementation," the report said.

Around 30 per cent of the rating agency's rated LAP portfolio is concentrated in the NCR region which has high levels of unsold inventories as well as a lower market value of the property against the loan provided. This is likely to result in sluggish recoveries from non-performing assets.