Venu Srinivasan,presient of the Confederation of Indian Industry (CII) President stressed the need to restructure the loan norms for repossession of vehicles on default of payment, to encourage banks and other lenders to extend finance in the automotive sector, reports PTI.

He met Prime Minister Manmohan Singh on Saturday and strongly recommended structural changes in the loan norms to enable banks to repossess vehicles from defaulters, so that banks could come forward and lend money. Currently, non-banking financial institutions are not covered under the RBI's guidelines.

He said auto industry expected clear-cut rules on who and how a vehicle could be repossessed. Many banks had stopped financing for vehicles because recovery and repossession from defaulters was impacting the industry. Sales fell in the second half of next year and started picking up slowly in the beginning of this year following the two stimulus packages in last December and January.

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