Nano showroom and Nano loans

Hyderabad, July 16 (ANI): Tata Motors, India's leading auto major, has rolled out its first commercial consignment of Nano, the world's cheapest car, at Hyderabad. Residents in the Twin Cities of Hyderabad and Secunderabad had been eagerly waiting for the Tata Nano car, costing just over rupees one lakh.
They contended that this car is a boon for the middle class society.

NANO LOANS:
The Nano is set to hit the road in a matter of days. But for the close to 70,000 consumers who booked it through loans, there could be some bad news. Banks have turned cautious. Reason: the low ticket size of the loan that means higher cost of execution. Banks CNBC-TV18 spoke to said the cost of servicing a two-wheeler loan is as high as 25% and which is one reason many banks have been switching off from that segment. The ticket size for the Nano is between a two-wheeler and any other car, and the cost is working out to between 18–20%. And with the rate of interest around 10%, it is making little sense for banks to push these loans.

The bigger issue for banks is the tightening of internal norms they have been carrying out over the past few months. Several banks have been more keen to give loans only to customers of the bank. A leading PSU bank told CNBC-TV18 they are waiting for the car to be delivered before they extend the loan. Moreover, while few details were asked from consumers at the time of booking like a photo ID and residential proof, income and guarantor details are only now being sought prior to sanctioning the loan.

Bankers say many who have booked the Nano have a profile that matches that of a two-wheeler loan taker. And this is a segment from which several banks have turned away owing to higher defaults.

It is learnt that banks are in active dialogue with Tata Motors to avert a potential dispute considering the MoU signed between Tata Motors and banks stating that all loans need to be processed by July 23 else a penalty of Rs 3,000 on banks will be charged.

Moreover, banks are hoping for some financial support from Tata Motors. When contacted, Tata Motors said, "Banks will apply the same norms, including interest rates, for providing loans to Nano customers as that for their customers for any other car."
Source:moneycontrol.com