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SBI may levy 14% interest on Nano loans
Surajeet Das Gupta & Swaraj Baggonkar in New Delhi | March 17, 2009 04:48 IST
Last Updated: March 17, 2009 08:52 IST
General managers of SBI branches across the country had a meeting with senior Tata Motors executives last week to finalise the branches and the method of rolling out the loan scheme across the country, especially in rural locations and small towns.
The terms for the Nano finance scheme are stiffer than those offered by both government-owned and private sector banks for comparable tenures. Government-owned banks currently charge between 11.5 and 12 per cent, although SBI is charging a concessional 10 per cent for car loans before May 31 for the first year as part of a special scheme.
Private banks like HDFC Bank [Get Quote] charge interest of 12 to 12.5 per cent and ICICI Bank [Get Quote] 14.5 per cent. Most banks finance up to 85 per cent of the price of the car.
According to sources, the company has already received over 40 million queries on the Nano on its websites. The entry-level model will cost Rs 1 lakh (excluding freight and value-added tax ) and consumers are expected to pay Rs 25,000 to Rs 30,000 more for the air-conditioned model, according to dealers who have still not been given the final pricing.
Asked about the finance scheme, a Tata Motors spokesperson said: "The booking process and other details will be announced on March 23, 2009. In any case, we have said on February 26, 2009, that Tata Motors is making arrangements for the widest possible network to book the car, so that prospective customers can conveniently avail of booking facilities at their locations, across the length and breadth of India. Your information on interest rates etc is purely speculative." An email query to SBI spokesperson did not elicit a reply.
Those in the know say that the company will be constrained by the number of cars it can roll out from assembly lines in Pune (Maharashtra) and Pant Nagar (Uttarakhand), a makeshift arrangement till the main plant in Gujarat starts operations in October. In the first 12 months, the aim is to roll out around 100,000 cars.