| Khattar & Purwar: Dream merchants
Mumbai, Feb. 12: One is the largest bank in the public sector. The other is the biggest automaker of the country. So when they team up it’s something worth taking note of.
State Bank of India and Maruti Udyog Ltd today announced the formation of SBI-Maruti Finance that will provide car finance to customers at lower interest rates in an effort to widen the auto market in the country.
SBI chairman A. K. Purwar and Maruti managing director Jagdish Khattar were personally present to announce the strategic tie-up.
The two giants will use each other’s existing customer base to cross-sell Maruti vehicles and SBI car loans.
Under the alliance, a person can buy a Maruti 800 Euro 1 at a monthly instalment of Rs 2,760 for a tenure of seven years at ex-Gurgaon showroom prices and a down payment of Rs 31,488.48. Other Maruti models are also available under this scheme.
In the first phase, SBI-Maruti Finance will be launched in 37 cities.
SBI has assured that there would be no prepayment and processing charges. Moreover, if a customer opts for SBI finance, he would get a discount of up to 30 per cent on extended warranty charges.
Maruti wants to convert two-wheeler owners into car-owners, while the State Bank is keen to widen its retail presence. The bank has made inroads into the home finance markets and car finance is a new area of growth.
“This alliance sets out to put India on wheels,” declared Khattar. Of all cars sold in India, 75 per cent are through organised finance, but the penetration of car owners in India is an abysmal six per thousand as against the United States’ 460 and South Korea’s 161 per thousand. Even Pakistan and Sri Lanka have around 12 cars per thousand.
“We have to reach people at lower rates of interest. Maruti has cars for the people while SBI has the funds,” Khattar said.
Purwar said, “With such a mass base, this combine will become a formidable force.”
For Maruti, the joint venture was waiting to happen. As competition nibbles away market share, financing has become very critical.