Auto News

Government Banks Raise their Share in Auto Finance

By Motortrend India Staff   |   24 March,2009

In order to provide better facility to its customers, the car manufacturers are joining hands with several government banks. Over a period of time, the tie-ups between the car manufacturer and the banks have increased and in some cases it has doubled.

This has made car financing easy for a buyer which in turn is contributing to the sales volume. India’s largest lender the State Bank of India (SBI) has cut down the interest rates from 11 percent to 10 percent on the car loans for a year.

The Korean car manufacturer, Hyundai Motors India has experienced an increase of 30 per cent from 20 per cent sales because of its tie up the PSU bank. It is not just the lower interest rates that attracted the buyers but also because the reach of the public sector banks. SBI which is spread across the country with 11,000 branches is definitely an easy to approach bank.

Tata motors too tied-up with many banks. The Japanese car manufacturer Honda Siel Cars India is also looking ahead to tie-up with nationalised banks.

According to a Kolkata-based NBFC official, “There is a gap of at least two or two and a half per cent between non-banking financial company (NBFC) and PSBs. This has substantially impacted our business. Car loan disbursals have been down by at least 20-25 per cent in the last two months. In such a scenario, we have to realign our policies and target the income group not covered by banks, which is definitely little riskier investment for us.”

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