Country's leading bank and top money-lender, State Bank of India (SBI), is planning to imply a lower rate of interest at 11.25 percent for all the tenures, which will now be the card rate. This move is an attempt by the bank to solidify its retail car loans portfolio. According to the bank, it has financed most cars among other banks during last fiscal. If sources are to be believed, as on March 31st 2012, the bank's retail car loan portfolio accounts to Rs. 20,000 crore.
Managing Director (MD) and Group Director, SBI, A. Krishna Kumar said, “We are targeting a growth of about 25% in our retail car loans portfolio in the current fiscal.” In the third quarter ended at December, 1,25,000 cars were financed by SBI under the campaign launched in September.
However, the campaign ended in January and the rate of interest was fixed at 12 per cent. The number cars financed by SBI went down to 75,000 during the fourth quarter corresponding to the price hike. The bank made the move to lower the interest rate after Reserve Bank of India (RBI) decided to cut repo rate in April.
During the Third quarter of FY 2011, SBI financed 96,000 cars, which reduced to 65,000 vehicles in the next quarter spanning January-March. According to a senior official from the bank, SBI financed largest number of vehicles in the whole of banking industry, and it was a consequence of the campaign.
As manufacturing issues faced by some car companies will not be there, growth in the retail car loan segment will boost up. He also stated that helping further the growth will be bank's solid loan origination system, intensive loan sanctions and branches focussing solely upon car loan product.
According to Society of Indian Automobile Manufacturers (SIAM) monthly statistics, the upward slope of the car industry slowed down by 0.43 per cent during September-December
The State Bank of India shares a mutual understanding and agreement with most of the companies and has a good relation with the dealers, leading them to divert customers towards the bank for car loans. For the car loans, average amount sanctioned is Rs. 3.5 lacs. In order to provide online loan sanctions, SBI is laying its focus.
