Financial Daily from THE HINDU group of publications
Saturday, Jun 05, 2004
Money & Banking
SBI tie-up with Maruti smoothens the road for car loan borrowers in Kerala
Thiruvananthapuram , June 4
WHILE infrastructural drivers such as good roads and attendant fuel economies are widely believed to have fuelled growth in the auto sector elsewhere in the country, Kerala continues to be heavily dependent on repatriated NRI funds, cheaper finance schemes and, above all, growing aspirational values.
With market analysts swearing by a healthy 25-30 per cent growth for this year (2004-05) too, auto manufacturers cannot be faulted for expecting the State to play no mean a role in translating the outlook into hard numbers.
The State has majored into a fast-growing market for A and B segments so much so it accounts for nearly nine per cent of Maruti Udyog's sales in these two segments countrywide. No wonder, banks and financial institutions have been going all-out to woo customers, and have apparently hit a goldmine with families with two earning members in husband/wife.
A fact brought out in no uncertain terms by the business achieved by the first Personnel Banking Branch of State Bank of India in the Kerala Circle, based here. The Thiruvananthapuram branch was recently in the headlines, having become the first individual branch of a nationalised bank to sanction the 1,000th car loan. This feat was achieved in less than five years of operations, something that made no lesser a person than the Maruti chief, Mr Jagdish Khattar, himself to fly in and celebrate the occasion with the bankmen.
Mr V.K. Bhat, the Chief Manager of the branch, told Business Line that the total number of car loans sanctioned had reached 1,040 and was still growing. Significantly, 98 per cent of these, if not more, were standard assets. This was in contrast with the high level of delinquencies seen in private sector vehicle financing sector clinched basically through agents.
Most of the customers were government employees and teachers with an average monthly net income of Rs 6,000 - Rs 7,000. However, equated monthly instalments are promptly paid up and very few, if any, commit default on EMIs. On the other hand, the branch has been experiencing pre-closure of car loans to a great extent. During the last financial year alone, more than 100 such car loans, aggregating to Rs 6 crore, were closed in this manner. The bank does not charge any penalty for pre-closure.
The relatively high aspirational levels associated with Keralites have been a major factor driving car sales in the State. For instance, Mr Bhat said, a family belonging to the same economic class in a more cosmopolitan city such as Bangalore would first go for a two-wheeler. It would graduate to a car only later.
Opened in 1999, the branch is equipped with modern technology, has excellent ambience and centrally air-conditioned premises manned by a chosen complement of staff. It was set up to mainly cater to the high net worth individuals, residents as well as non-residents, and was designed to take on competition from new generation private sector banks.
There are about 82 such SBI branches in the country now and these branches have not only managed to garner a sizeable chunk of business during the last five-year period, but also successfully thwarted the exodus of high value business to competition.
The Thiruvananthapuram branch has in the last five years done a business of over Rs 72 crore (deposits and advances), which is remarkable when compared with the performance by 15 regular branches of SBI in the city, Mr Bhat said. The branch is also ranked within the top 15 branches in the Personal Banking Branches network.
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