It is Diwali time again and banks and non-banking finance companies are trying to woo customers with attractive offers such as cash-back, zero per cent interest, ultra-quick loan approvals, extra reward points, and, in some cases, even an overseas trip.

The idea: Amid weak credit demand in the financial year so far, banks are trying to grab market share when the consumer propensity to spend is high.

Private lender HDFC Bank, for instance, is trying to entice customers to spend, by offering a range of discounts on the use of debit and credit cards for purchases.

Parag Rao, Senior Executive Vice-President, Business Head - Card Payment Products & Merchant Acquiring Services, HDFC Bank, said: “During the festive season, consumer spending is at the highest and credit card transactions are usually of bigger ticket size compared to cash.

“Hence, merchants and banks promote the usage of cards with these deals.”

HDFC Bank is offering various cash-back schemes, two-wheeler financing up to 90 per cent as well as reward points on credit and debit card purchases especially through e-commerce websites and at lifestyles stores.

Since the loan demand is weak, other banks such as State Bank of India, HDFC Bank and ICICI Bank are also relying more on reward points and various card and cash-back schemes to boost credit demand to ride on the consumer spending wave during Diwali.

Big ticket

India’s largest non-banking consumer finance company, Bajaj Finance, on the other hand is trying to woo customers by offering them a trip to Europe or a chance to win cars.

The Pune-based company is looking to increase its loan book size by 1.5 times during this festival period.

In the quarter ended September 30, the company reported assets under management of ₹28,000 crore. Ever since the company launched a series of festive offers across the product categories, it said it has achieved 80 per cent of its target.

“With its ongoing festive sales, the company aims to increase its market share to 25 per cent (from 16 per cent now), effectively ensuring that one in every four consumer durables sold in the country is financed by Bajaj Finance,” the company said in a press note issued on Tuesday evening.

The company expects 25 lakh loan applications across product categories in a span of about a month through the promotional offers in the season. On the other hand, banks are trying to push their offers silently through the various distributors they have partnered with.

According to Rao, “HDFC Bank promotes these deals through various touch points. Customers avail these deals as they are over and above the discount offered by the merchant. Typically, the number of customers transacting in the participating merchants’ increases by two-three times during the offer period.”

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