India’s largest private sector bank, ICICI Bank, plans to go aggressive on car and truck loans again. The bank had been the biggest lender for automobile buyers till three years ago but had scaled back on auto loans in the past two years on the back of rising defaults. The bank is however discarding its old strategy of pushing loans through sales agent in favour of auto dealers. ICICI bank recently organised a pan-India meet of over 180 car dealers to discuss this issue.
Rising defaults from borrowers coupled with the liquidity crisis in the economy had forced the bank to cut lending in the market, however, in the past few months, ICICI Bank has started showing renewed interest in auto loans, a natural result of the robust demand witnessed in the car market in the past one year with passenger car sales growing at 16.2% to 10.52 lakh units between April and October, 2009 over the year-ago period. According to an executive in the auto finance industry, ICICI Bank has doubled the amount earmarked for auto loan disbursement this fiscal to over Rs 1,500 crore, as against the year ended March 2009.
According to sources in the banking industry, ICICI Bank remains the largest player in auto finance due to its huge disbursements in the past, however other banks, such as SBI, PNB, Canara Bank and Bank of Baroda, have overtaken it in terms of new auto loans.
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