New Product : TURBOSAPNE   SBF ? Financing Light & Commercial Vehicles Tie-up with Mahindra & Mahindra

 

 

Overview of Industry

The Government Auto Policy aims at making India an "Asian Hub' for the manufacture of light and medium commercial vehicles.    Road Transport is a preferred mode for people and goods.  The share of freight traffic by road is about 60% and share of passenger traffic by road is 80%.  Road traffic is growing at a rate of 10% p.a.   One of the biggest catalysts for growth is infrastructure which got a big boost by National Highway Development Project.

 

 

About Mahindra & Mahindra

Mahindra & Mahindra is a major player in utility vehicle and light commercial vehicle segment enjoying a market share of 48.99% in utility vehicles and 14.88% in respect of light commercial vehicles upto 4 tons. 

 

They have evinced keen interest in entering tie-up arrangement for financing commercial vehicles such as Major (CL500), Commander 650, Savari, Scorpio Pick up can, three wheelers, etc. manufactured by them and are priced between Rs.1.8 lacs to Rs.3.8 lacs.

 

We have signed a Memorandum of Understanding with M/s. Mahindra & Mahindra on 20^th April 2004 for extending finance to the commercial vehicles manufactured by them.  The salient features of the tie-up are furnished below.

 

·                     This will be applicable throughout the Country at all retail network branches of SBI.

 

·                     Financing purchase upto ten vehicles will be done under SBF Scheme, which falls under Priority Sector Advances.

 

·                     Benefits from company :

i)  Subvention amount Rs1000 per vehicle for one year

          ii) Two additional free service coupons.

 

Sourcing of Application

Company through dealers would obtain the application and after due diligence (at least validating customers' basic information) would forward the applications to the respective branches. Alternatively, Branches may also obtain the application directly for finance.

 Other details of the scheme are as under:

 

A. Purpose

To finance transport operators upto 10 vehicles of all make, utility vehicle, light commercial vehicles and medium commercial vehicles.

B.  Eligibility

Individual or association of not more than 6 persons.

C.  Coverage of vehicles

• Utility vehicles and low commercial vehicles manufactured by M&M are covered under the tie-up arrangement.

 

• SOFT TOP include Commander 650, Major (commonly called CL-500) and Savari Rang.

 

D.  Pick Up

 

Single cabs and double cabs.

(Theses vehicles are priced between Rs.3.55 lacs to Rs.3.80 lacs)

 

E. Number of vehicle

Not more than 10 vehicles including the vehicle to be financed.

F.  Interest Rate

 

Size of credit limit	Repayable below 3 years	Repayable in 3 years and above  Rate effective from 1.1.2004 (SBAR 10.25 % p.a.)
Upto  Rs. 50,000/-	1.75 % below SBAR - 8.50% p.a.	1.25 % below SBAR - 9.00% p.a.
Above Rs. 50,000/- and up to Rs. 2 lacs	0.75% below SBAR - 9.50 % p.a.	0.25% below SBAR- 10.00 % p.a.
Above Rs. 2 lac but below Rs. 5 lac	SBAR - 10.25% p.a.	0.50% above SBAR - 10.75% p.a.

 

G.  Processing charges    :   Waived

 

H.   Appraisal:

Based on profitability of the business, integrity and experience of the borrower.

 

I.   Margin  :    20%

 

J.   Insurance  : Comprehensive Insurance

K.  Security

 

      i)    Primary    :   Charge over asset created out of Bank's finance.

      ii)  Collateral  : Charge over other  movable  immovable  assets  to  cover    50% of the loan amount and/or third party guarantees, if available.

 

L.   DSCR (Gross) : Minimum 1.75%

M.  Repayment:

Between 3 to 7 years with a moratorium of 6 months; flexible repayment; higher quantum of repayment may be fixed in initial years, if considered necessary. Repayment period may vary based on DSCR worked out in each case.

 

N.  Time Norms

Loan would be sanctioned within 10 days from the date of receipt of completed application.

 

O.  Other terms & conditions:

i)        Charge should be registered in the books of Regional Transport Authority.

ii)       Blank Transfer Forms signed by the borrower.

P.   Advantages

·                     Increase business under SBF.

·                     Sourcing of Business through tie-up.

·                     Total financial solution for customer at competitive prices.

 

Rationale:

 

• Increased business under SRTO, SBF 
• Leveraging our vast branch network with strengths of dealer network of Mahindra & Mahindra.