Even though Mumbai is slowly opening up, there is a good chance that thousands of private and school buses, and even cabs, may go off road from tomorrow, as the Reserve Bank of India has not yet extended the three-month loanmoratorium that ends today. Having suffered tremendous loss of business during the pandemic, bus and cab owners said if banks insist on collecting the deferred EMIs and the accrued interest from September 1, they will have no choice but to stop plying their vehicles.
Prasanna Patwardhan, president of the Bus and Car Operators Confederation of India (BOCI), said currently even a single bus operator is not in a position to pay the EMI on his vehicle, as there has been hardly any business in the last five months. He said if the moratorium is not extended, many of these buses and taxis will be forced to go off road, “and there will be total chaos”.
Around 33,000 buses and 80,000 taxis, including the app-based cabs and tourist taxis, operate in the Mumbai Metropolitan Region (MMR). About 75 per cent of the owners of these vehicles have taken bank loans. While EMIs for cars range between Rs 10,000 and Rs 17,000, for buses it’s nearly Rs 50,000. The amount, held in abeyance because of the moratorium, runs into crores and needs to be paid to banks and non-banking financial corporations (NBFCs).
The BOCI, which is the nodal body for transporters in Maharashtra, held a meeting last week on the matter. It also wrote to Finance Minister Nirmala Sitharaman on August 12, as well as to various banks, asking for an extension.
There is, however, a problem if the moratorium is to continue. The banks and NBFCs that usually extend loans will also be hit hard if transport operators don’t pay the EMIs. According to data released by the RBI recently, the total exposure faced by banks in May was Rs 1.4 lakh crore and that by NBFCs was Rs 8.04 lakh crore.
Bearing the brunt
Shahid Shaikh is a second-generation bus operator who owns and operates the 99 Bus and Tours company in Jogeshwari. The 42-year-old also owns 15 buses but only two are transporting staff on essential duty. “I have to repay the loans on four buses,” said Shaikh. “I will have to pay over Rs 1 lakh in EMIs alone. I have already started getting calls and messages from NBFCs who have also levied additional ‘return charges’ for non-payment in July.”
Shaikh, also a BOCI member, has other overheads. He has been taking care of his staff of 10 during the lockdown. Besides paying a salary of Rs 10,000 to Rs 20,000 to each employee, he has also been giving them monthly rations with help from NGOs.
This is the story of just one bus owner. There are many who, despite running their buses for essential services and conducting inter-state travel for migrants, still haven’t made enough to sustain themselves.
BOCI treasurer Harsh Kotak said, “If bus operators are asked to pay EMIs, then very soon you will find buses and cars parked on the road, or we will have to ask the banks to confiscate them.”
The end of moratorium will also affect cabs – from black-and-yellow taxis to those running on aggregator platforms – and even motorcycles used by food delivery personnel. Taking note of the situation, the Indian Federation of App-based Transport (IFAT) workers, too, has written to the Centre.
Sachin Gharat, a driver-partner with both Uber and Ola for the past four years, has to repay loans on two vehicles. He sold one of them last year and bought a new car. “I have been receiving calls saying they will confiscate my vehicle if I don’t pay up,” said the 42-yearold resident of Prabhadevi, who has not been stepping out of the house since he has two small children. As a result, the family has had no income and has been staying afloat by borrowing money.
No relief for them
There are other drivers who have been operating and paying the EMIs, even during the lockdown, because their lenders have decided to ignore the moratorium.
“Is the government waiting for them to take extreme steps, just like the farmers? We have demanded that the moratorium be extended by at least 12 months,” said Prashant Sawardekar, IFAT president.
Recognise the industry
One of the largest financiers, Shriram Transport Finance Company (STFC), just reported that net profit in its first quarter is down by almost half – to Rs 320.06 crore from Rs 634.25 crore – compared to the first quarter of the last financial year. STFC managing director and CEO Umesh Revankar, however, is not worried. He said, “We have provisions for default, which may rise in the later quarters.”
“Demand for an extension of the moratorium is mostly coming from large operators who are finding it difficult to run their fleets at optimum level due to a shortage of drivers, a subdued demand and a sluggish manufacturing sector, among others,” Revankar said.
“However, small operators who are also owner-operators of their trucks and buses, are not making such a demand as they are mostly finding jobs.” About 70 per cent of the operational fleets of buses and trucks in India is owned by owner-operators who own less than five vehicles.
As a future solution, Revankar said the Centre should declare the transportation and logistics sector an industry so that it benefits from schemes similar to those announced for micro, small and medium enterprises, including getting credit at concessional rates. That is, at best, a long-term suggestion. Right now, transport operators are more worried about what will happen from September 1. Also Read: Shriram Transport Finance to tap large global investors to seek re-election of Punit Bhatia
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