Banks jockey for finance bonanza
For banks and other lending institutions, the Tata Nano is an opportunity to boost business amid an industry slowdown, as booking takes off on April 9.india Updated: Mar 23, 2009 22:39 IST
For banks and other lending institutions, the Tata Nano is an opportunity to boost business amid an industry slowdown, as booking takes off on April 9.
Besides the State Bank of India (SBI), which is an exclusive partner for Tata Motors in submitting applications with fees, others like ICICI Bank and HDFC Bank are also set to fund the small car’s purchases.
SBI will accept a non-refundable Rs. 2,999 as adjustable charges towards the booking amount on allotment to be adjusted against interest payments for the funding. The booking amount is likely to be around 70-80 per cent of the price of car. At 80 per cent of an assumed price tag of Rs. 1 lakh, the Rs. 2,999 amounts to an annual interest of 15 per cent paid in advance.
ICICI and HDFC Bank and other private banks are also expected to keep the booking amount at around Rs 3,000. The bank will charge this as an interest component. The money is not refundable, irrespective of whether one gets a booking or not.
For now, banks are funding the booking amount for the customer and not the financing of the car.
While the allotment will take three months the banks are yet to work out financing schemes after allotment.
“The percentage of funding and the interest rate to be charged will depend on the profile of the customer,” said NR Narayanan, head, auto loans, ICICI Bank.