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ICICI discontinues 2-wheeler loans at dealer's end

Written by sanju singh

Thursday, 07 August 2008

07 August 2008; economictimes.indiatimes.com: George Smith Alexander: MUMBAI: ICICI Bank, the country’s largest two-wheeler financier, is discontinuing such loans offered at the dealer’s end from August 15. This model accounts for the bulk of the two-wheeler business for ICICI Bank. The bank has already transferred 200 employees in this unit to other departments. ICICI Bank executive director V Vaidyanathan confirmed this to ET, “The bank has decided to reorient the two-wheeler business through branches rather than at dealerships,” he said. ICICI Bank has a network of around 1,400 branches. The two-wheeler business in India has been facing a major upheaval, with many financiers exiting the market due to rising defaults and collection issues. Incidentally, some of the newer players are also said to be cutting back on disbursements. The move will impact the two-wheeler business, which is already seeing a slowdown. Currently, ICICI Bank disburses around Rs 180 crore of two-wheeler loans every month. Interest rates for two-wheelers are currently at around 24%. The average ticket size for these loans is quite small at around Rs 33,000, while the required income is Rs 5,000-15,000 a month. One out of four repayment cheques in two-wheeler loans bounces, but the backlash against the use of recovery agents has made repossession and recovery through agents difficult for lenders. “The clear focus of the retail business is to improve credit quality and all norms are being put place in order to achieve this. The business strategy is being reworked to deal directly with customers and improve our interaction with them. The focus of the bank is on controlling operating expenditure and increasing efficiency,” added Mr Vaidyanathan.