BackMaruti ties up with Bank of Baroda for dealer financing
The partnership will allow Maruti Suzuki to provide more comprehensive financing opportunities for dealers as well as customersLeading banks lately introduced strict credit norms for auto dealers due to the numbers of bad loans increasing in the segment
PremiumMumbai: Maruti Suzuki, the country’s largest passenger vehicle manufacturer, on Friday announced the signing of a memorandum of understanding (MoU) with Bank of Baroda to improve credit for its dealers and customers.
This development will help calm the nerves of the company’s dealers who are under pressure as some leading private and public sector banks have decided to reduce their exposure to automobile inventory funding.
The partnership with Bank of Baroda will allow Maruti Suzuki to provide more comprehensive financing opportunities to dealers as well as customers. Dealer inventory financing would be in accordance with Bank of Baroda’s existing Supply Chain Finance, said the company in a statement.
The tight liquidity situation in the financial system in the aftermath of the IL&FS crisis and rising bad loans have prompted the banks to take such a decision.
Lenders have introduced strict credit norms for automobile dealers due to the rising cases of bad loans in this segment of the automobile industry. Dealers were asked to provide collateral for credit being extended by banks. The percentage of the collateral depends upon the financial position of a dealer.
Automobile companies have arrangements with banks for providing finance options to prospective customers. Dealers usually borrow money from banks to meet operational expenses.
According to Shashank Srivastava, executive director, marketing and sales, Maruti Suzuki, the company is confident that this collaboration with one of India’s largest public sector banks will “offer finance solutions to our customers and dealer partners".
“We are delighted to be associated with Maruti Suzuki. Given the huge potential of the auto loan and commercial finance segments, we are hopeful this agreement will strengthen our presence," said P S Jayakumar, MD & CEO, Bank of Baroda.
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