Lessening the support to grand two-wheeler finance market, India’s second largest bank ICICI after the declaration of Citibank, has announced to withdraw its loan service for two wheelers from the showroom since coming August 15.
The Bank in this regard is informing the dealers for ending up its service. Now, the customers will have to move to its existing branches for exploring the two wheelers loan. ICICI, however, has announced to continue its service for cars.
The break up decision of ICICI bank will definitely hit the receding two-wheeler selling market, as since August 15 bank will award loans to only choosy customers after adequate verification.
This move of the bank will also decrease the cases of defaulters as earlier the bank was penchant to disburse the biggest amount of loan of Rs. 180-crore per month.
But, the rising cases of defaulters and tightening rules of Reserve Bank of India - not to harass the customers through using illegal means or hiring local goons but use legal way – has led the bank to switch its service from show room to bank’s window, as per sources.
The market experts believe that ICICI Bank’s move to shift its employees from showrooms to other departments is not only for ‘changing bank’s marketing strategy’ as ICICI claims but also its rising pressure of high operating cost.
ICICI Bank has already shifted its 200 employees to other departments.
Moreover, sources say that this move of ICICI may also become beneficial for the borrowers because bank may likely to pass the 5% dealers’ commission that earlier dealers charge at showrooms, to customers.
At present, ICICI Bank has nearby 1,400 branches in its network and distributing the auto loan at 24% interest rate.
Besides ICICI Bank, HDFC Bank- the second largest two-wheeler financier that distributes auto loan around Rs 120 crore every month- GE Money, SBI and PNB are other major players, whose auto loan business is likely to scale up gradually after ICICI’s announcement.
Auto dealers on the other hand are worried about this latest move of ICICI and assumed that it would be harder to sell vehicles in the coming festive season.
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