HDFC Bank stops finance for some Eicher sellers

MUMBAI: HDFC Bank has discontinued inventory finance to some dealers of Eicher Motors — makers of the Royal Enfield motorcycle. In a communication to a dozen-odd dealers, the bank has asked them to settle dues.

According to a spokesperson, the communication is limited to inventory funding and has no impact on customer finance. “The communication has been sent to dealers who are well-capitalised and do not need the bank’s funding and comprise a minuscule percentage of Royal Enfield dealers. This move has been in consultation with both the parties and some of the dealers,” the bank said in a statement. It said that it continues to be a strong and growing partner to the two-wheeler manufacturer.

Earlier in the day, the market was abuzz with news that HDFC Bank had cut inventory financing for Eicher Motors dealers. This triggered speculation that the dealers faced repayment issues. The withdrawal of credit facilities also meant that wholesales of Eicher Motors would be affected.

Private banks across the board have been reporting a decline in auto loans, thanks to falling sales in the sector. Banks are also seeing a deterioration in the finances of several new auto dealerships that have come up.