The Hindu Business Line : Maruti taps Regional Rural Banks as private banks reduce financing

New Delhi, June 7 Maruti Suzuki is forging more tie-ups with regional rural banks (RRBs) as it seeks to expand its presence in the rural areas. It is now even encouraging its dealers to tie up with regional rural banks with the private sector banks going slow in financing vehicles.

The private sector banks going slow on vehicle financing is mainly due to the strict guidelines issued by the Reserve Bank of India to the banks on recovering a vehicle in case of default that has led to banks such as ICICI Bank be cautious in lending.

“The market is tough due to limited availability of finance. However, we have tied up with more regional rural banks to provide finance in many areas, making it possible for us to sustain growth in such times,” Mr Mayank Pareek, Executive Officer – Sales and Marketing, Maruti Suzuki India Ltd, told Business Line.

Maruti’s two recent tie-ups include Assam Gramin Vikas Bank and Thane Gramin Bank. He explained that these institutions with a smaller customer base have a better understanding of the customer, which makes it easy for them to provide finance in regions where other banks would be reluctant to. The interest rate of RRBs is 50 basis points higher that that of commercial banks.

Maruti is working with 20 regional rural banks that have a reach of 3,000 branches. Some of the States where it has more number of collaborations include Tamil Nadu, Kerala, Andhra Pradesh, Maharashtra and Punjab. It has the maximum partnerships in Uttar Pradesh, with around seven institutions.

Maruti officials said that in the last six-eight months, even its dealers were independently working with institutions like the Pragati, Gramin and Chikmagalur banks covering towns like Shimoga, Bellary, Hospet and Davangere to ensure smooth availability of finance.

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