The Hindu Business Line : Two-wheeler loans for farmers: Bajaj Auto ties up with Andhra Bank

THE two-wheeler major Bajaj Auto Ltd (BAL) has entered into an alliance with Andhra Bank for extending two-wheeler loans to the farming community across the country with special concessions to the customers under the scheme called `Bajaj Kisan Chakra'.

Addressing newspersons after signing a memorandum of understanding with Andhra Bank, the BAL Regional Sales Manager, Mr Senapati, said the association of two giants in the respective fields was expected to give boost to mutual business considering the prevailing scenario in the two-wheeler industry in the country.

According to Mr Senapati, nearly 60 per cent of the two-wheeler sales of BAL were from hire purchase, which again were mostly dominated by the unorganised financial services sector with relatively high interest rates. With the public sector banks such as Andhra Bank offering two-wheeler loans at interest rates of around 9.75 per cent with repaying schedules of around 60 months on diminishing balance basis, the customers would have a benefit around 30 to 40 per cent.

The Andhra Bank Executive Director, Mr R. Balakrishnan, said of around 1,120 branches across the country, nearly 670 branches were located in the rural and semi urban areas, catering to around seven-lakh farmers. Of the bank's agricultural exposure of around Rs 2,060 crore, loans to small farmers accounted for around Rs 873 crore. Stating that though the bank was into two-wheeler financing, he said it was lacking a focussed approach.

Andhra Bank and BAL are aiming to generate a business of around Rs 100 crore for the next fiscal under the tie-up. According to Mr Senapati, the auto major expects to sell around 24,000 vehicles during next fiscal under the scheme. A good finance backed with excellent reach and penetration would be a boon to the two-wheeler sales, he said.

"In Andhra Pradesh, the rural sales command a very high percentage of 75 per cent of the overall sales and the farmers constitute a large segment of two-wheeler customers. The rural markets are even dependent very heavily on unorganised financiers to cater to the requirement of two-wheeler finance, since not many financial institutions, banks and NBFCs are operating in those areas," Mr Senapati said.

Mr Balakrishnan said the product from the corporate association of Andhra Bank with BAL aims at providing finance to farmers at a low rate of interest of 9.75 per cent compared to the normal lending rate of 10.5 per cent, resulting in a saving of 75 basis points.

Further the farmers can also have the repayment flexibility of half-yearly repayments. The objectivity of the scheme was to empower the Kisan with Mobility and thus enhance his productivity and profits.

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