State Bank of India to rev up auto loans

State Bank of India will focus more on auto loans to cash in on the expected growth in that sector. “Going by the market signs in the last two months, auto sector is likely to post a healthy growth this year. We see a better traction in the market, and we would like to ride the wave,” said PS Prakash Rao, Chief General Manager, State Bank of India.

Speaking to BusinessLine on the sidelines of an event here, he said SBI has been funding on an average 2,000 cars a day in the last couple of months. “We are pushing ourselves aggressively to grow our auto portfolio at a faster rate,” he said. According to him, in the last three months, the bank’s auto portfolio grew 18 per cent as compared with the corresponding previous year period, “which is pretty healthy”. Earlier, he announced the launch of a special finance scheme for the cab operator OLA for its Driver Entrepreneurs programme. The bank has entered into a tie-up with the company for financing the new vehicles purchased by driver entrepreneurs identified by the cab operator. The driver entrepreneur will benefit from the lower down payment of just 10 per cent, easier documentation and faster loan approval process

Besides, these loans would also be covered under Credit Guarantee Scheme of the Government and therefore “our exposure to the individual borrowers would also be protected to a considerable extent”, Rao said. According to Anand Subramanian, Director (Marketing Communications), Ola, the cab operator has come up with several such initiatives in the last two years to foster entrepreneurship amongst drivers.

Recently, it has set up a fund of ₹100 crore to enable drivers buy their own cars and turn driver entrepreneurs.

It also tied up with two non-banking finance companies – Mahindra Finance and Cholamandalam Investment and Finance Co – for similar tie-ups.

“Today, over 70 per cent of the drivers on the Ola platform are entrepreneurs themselves,” he said.