The conspicuous absence of giant public sector banks seems about to end, with their indicating a willingness to enter the field where auto majors have long preferred private banks or non-banking financial companies. With the economic slowdown hitting auto finance, car makers are happy to consider a long-ignored option.
KC Chakrabarty, chairman and managing director, Punjab National Bank told Hindustan Times that his bank was ready for it but would offer no concession to dealers.
“Several auto majors have approached us and we have no problems in financing cars at a commercial rate,” he said, adding that it would be based on the prime lending rate (PLR).
A senior official at another public sector bank also indicated an open approach on the matter, but did not want to be quoted.
Public sector banks are not allowed to hire agents like their private sector counterparts and that a key reason for its limited presence in the segment.
“Based on our request, public sector banks are engaging in a dialogue with automobile manufacturers for enlarging their presence in the segment,” said Dilip Chenoy, Director-General, Society of Indian Automobile Manufacturers (SIAM).
The Reserve Bank of India is indicating a mood to ease interest rates, and that could be a big chance for car makers whose 0.48 per cent growth in the April-November period against 13.8 per cent a year ago tells their story of woes. Retail finance is a major problem, and public sector banks, who usually lend at a lower PLR, could come to their rescue.