SBI plans to disburse 50% more car loans

State Bank of India (SBI), which announced an aggressive auto loan scheme on Saturday, hopes to enhance monthly disbursements by 50 per cent from around Rs 300 crore at present. The largest and the most aggressive car financier, SBI is already financing over 10,000 cars every month.


Ever since it launched the special 10 per cent auto loan scheme on February 23, SBI has moved into the top gear. Senior bank officials said they are financing close to 15 per cent of the total cars sold by Maruti and Hyundai. SBI is also mulling over a better scheme for home loans, which already runs an attractive special scheme of 8 per cent for the first year.


“We are already the largest financier of new cars. It is difficult to say whether we will improve our home loan rate or not. It will depend on the market conditions. We are targeting a 50 per cent jump in both our disbursals and the number of cars sold through the new scheme,” said a senior SBI official.


“We are also planning a number of other new initiatives in retail products with innovative pricing,” said P Nandakumaran, ch-ief general manager (pe-rsonal banking business unit) of SBI.

In the previous year, SBI marched ahead in the car financing space and is now the largest financier of new cars. The bank has taken proactive steps to improve the number of cars sold with finance amounts and some of the car manufacturers started showing good growth from March onwards, banking on the strength of the popular interest rate offer from SBI.


SBI car loan scheme offers a repayment period of seven years with no advance equated monthly instalments (EMI) and a free accident insurance cover for loan outstanding up to Rs 40 lakh. The bank will finance up to 85 per cent on the “on road price of the car.” Interest calculated on the daily outstanding balance by SBI reduces the interest burden on the borrower against the monthly outstanding balance or flat rate basis as charged by few others.


Under the scheme, the EMI for a SBI car loan for Rs 1 lakh will be as low as Rs 1,559 in the first year and Rs 1,647 in the second and third year. The SBI car loan card rates are 25 to 75 basis points below the bank’s prime lending rate (PLR).
SBI has entered into strategic tie-ups with Maruti Suzuki India and Tata Motors and financing arrangements with all major car manufacturers including Hyundai Motors.


About 70 per cent of the cars sold in India are financed while the remaining is bought outright.