Emergency brakes on Ola and Uber in Bengaluru as banks decide against lending to drivers

Owing to the increasing number of defaults on vehicle loans by Bengaluru-based drivers of ride-hailing apps like Ola and Uber, India’s top banks have decided against issuing fresh loans to such drivers. Not only this, banks have also decided to push to recover dues from these drivers.

Bengaluru is the largest market in India for these cab-based aggregators.

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After almost one-fifth of its loan book in the city registered defaults, the State Bank of India (SBI) has decided to stop giving vehicle loans to Bengaluru-based drivers of cab-aggregator company Ola.

"The total default amounts to Rs 60 crore in the city," said Gopal Krishan Kansal, chief general manager, small and medium enterprise, at SBI (Mumbai). It’s been a fee months that SBI decided to stop lending to Ola drivers in Bengaluru.

"We (still) disburse loans to Ola vehicles in Hyderabad and Chennai (where) the default rate is almost 7%," Kansal told ET.

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As per bankers, these drivers started to stop paying their EMIs after the sharp fall in their incomes, owing to Uber and Ola cutting down on their incentives.

Earlier, Ola and Uber drivers used to get commissions ranging from Rs 70,000 and Rs 1 lakh per month. However, these incomes have now come down to an average of Rs 40,000-50,000, thanks to the scarcity of cash with these companies after years of heavy spending.