Ola to rope in more vehicle financiers to reach target of 100,000 new cars

Last month the company had announced a tie-up with SBI to facilitate vehicle loans to cab drivers to reach its target within a year

Bengaluru-based ANI Technologies Private Limited, which runs taxi-hailing service under the name Ola Cabs, is in talks with a few more vehicle financing firms for arranging finance to cab drivers for buying their own cars.

Last month, the company announced a tie up with the largest public sector lender, State Bank of India (SBI), to facilitate vehicle loans to cab drivers for purchase of 100,000 new cars in a year’s time.

“We expect most of the finance to come from SBI though we have been speaking to a couple of more NBFCs for this purpose,” Anand Subramanian, director-marketing communications of Ola Cabs told Business Standard on Tuesday. The firm already has a tie up with Mahindra Finance.

Following the roll out of Ola Pragati, which seeks to facilitate loans with a daily repayment model to cab drivers, the firm has arranged the finance for purchase of 100 new cars so far, he said.

Ola is an online cab service aggregator and charges up to 20 per cent commission from the cab drivers out of the billing generated with the assistance of its technology platform, which customers access to book a cab service.

About 100,000 cabs are already on to the Ola platform across 85 cities in the country while the facilitation of vehicle loans would double this number adding to the revenues.

Those who avail of the loan facility will have to work with Ola for a fixed tenure and hour. “In a city like Hyderabad, a cab driver who is logged in to our platform for 10-12 hours a day would earn Rs 65,000-75,000 a month out of which he takes home Rs 20,000-25,000,” he said. Some cab drivers associated with Ola in Bengaluru now own 10-12 cabs using their initial earnings as investment, according to him. After the roll out in Bengaluru and Chennai, the firm formally launched the vehicle finance programme in Hyderabad today. SBI has already cleared loans for 21 cars and is examining 50 more applications forwarded by Ola.

While the daily repayment mode means smaller installments and a further saving on the interest payable on the loan, the bank would only look at a fortnightly repayment from these vehicle loan advances, according to SBI chief general manager C R Sasi Kumar.In Hyderabad, about 7,000 cabs use the Ola platform and this number is expected to double in a year.

Responding to a question, Subramanian said they had added additional security features. Apart from this, the fleet of ‘for the women by the women’ cabs has also been growing rapidly among Ola franchise, according to him.