With auto sales beginning to show signs of a recovery, State Bank of India has stepped on the gas to offer car loans. Thanks to easier lending norms, the country’s largest bank has seen a ramp-up in daily car loan sanctions.
The number of daily sanctions has grown to 1,300 during the third quarter (October-December 2014) against 300-400 in the first half (April-September 2014) of the current financial year.
As of December-end 2014, SBI had a car loan portfolio of ₹32,178 crore.
SBI had eased eligibility norms in October, allowing salaried applicants with a minimum annual income of ₹3 lakh to apply for a car loan. It was ₹4 lakh earlier.
For self-employed people and agriculturists, the minimum net annual income or net profit has been lowered to ₹4 lakh from ₹6 lakh.
In August 2013, SBI had tightened eligibility norms for car loans due to rising defaults. At that time, the bank had steeply increased the net annual income requirement from ₹2.5 lakh to ₹4 lakh for salaried customers and from ₹2.5 lakh to ₹6 lakh for the self-employed.
Tweaking appraisal system According to B Sriram, Managing Director and Group Executive (National Banking), “Car loans, in the first six months (of FY2015) grew slowly because there were certain policy decisions that were taken in the previous year to make eligibility more stringent and we were also re-tweaking our system of appraisal.” “We decided that towards the second half of the year we will go ahead and do a much more aggressive campaign,” he added.
In the October-December quarter, SBI approved almost 96,000 car loans. Sriram expects to end financial year 2015 with 10 per cent growth in car loans against the first half growth of 4.6 per cent.
Technology is helping SBI monitor car dealers closely. It is looking at the dealer’s market share and penetration in a much more focussed way.