Mahindra & Mahindra Finance’s latest earnings call highlighted a slower pace of tractor loans, a trend that mirrors broader rural credit tightening amid an uncertain agricultural calendar.
The company’s tractor disbursements, which accounted for 12% of total loans, grew only 13% in September, a sharp contrast to the 28% jump seen in passenger cars and the 32% surge in three‑wheelers.
While the overall loan book rose 22%, tractors contributed ₹1,979 crore, showing that the sector’s share is steady but its growth is stalling. Rural and semi‑urban markets grew at a marginally higher clip than their urban and metro counterparts, underscoring that demand is still anchored in the countryside but is not expanding as fast as before.
Drought risk is the headline worry: 282 districts across India are flagged as drought‑prone, and the finance arm is closely monitoring three states where water stress spikes farmer cash flow. Collection teams in Vidarbha, for instance, are probing borrower stress levels and have already trimmed funding in the most affected pockets.
Asset quality remains under the radar; gross stage‑3 assets were 3.42% of loans in September, down from 3.94% a year earlier, and the company’s credit‑loss buffer of ₹4,150 crore is deemed sufficient for current risks. The firm plans to shift to half‑yearly collections in the next couple of months, aligning repayment schedules with crop cycles, but it warns that delays could elevate default risk if the drought persists.
Looking ahead, the finance arm intends to keep a tight grip on pricing and risk, refusing to chase volume at the expense of asset health. The company’s strategy will likely stay rooted in the tractor market, which it views as one of its most resilient segments across economic cycles.