A Value-Based Approach

Even though the purchasing power has not been fully capitalised, finance companies have come up with novel schemes to lure the customer. K-value, from Kotak Mahindra Finance Ltd (KMFL) is one such scheme which seems to take roots in the country. Mr P Shreekanth, vice president of the company, speaks about this novel scheme.

The emergence of a host of schemes into the Indian market seems to confuse an average middle class consumer, rather than luring him into it. Comment.

A radical change has taken place in consumer finance industry in the last 10 years, which I would like to view in a different perspective. The change has taken place not only in the Indian scenario, but globally. Emergence of different players, with various modes of operation, have only strengthened the competition, resulting in benefit to the customers. Products ranging from perfume to clothes could be scrutinised and analysed before the purchase is made.

Same is the case with all schemes including consumer finance schemes, which has ended in a healthy competition.

Comment on your recently introduced K-value scheme.

K-value scheme is the novel addition to the consumer finance market. This was introduced in November 1997, and at present we are in the process of promoting this venture.

K-value is a customer durable finance system and each member is provided with a membership card, with which the members can purchase durables of their requirement. Unlike in a credit card system where the usual repayment time is about 45 months, under this scheme a member can pay for the purchase made in 12, 18, 24 or 30 months, according to his choice.

What do you think are the cutting edge provided by this scheme vis-a-vis others available in the country?

Even though, this scheme is similar to a higher purchase scheme, it provides the benefits of a plastic card. A member can step into any stop and buy a consumer durable of his choice by just flashing the card, and the payment to be made latter. The only condition is the purchase shouldn't be less than Rs 10,000.

A K-value membership provides confidence to the buyer to start with, the confidence of having money at his beck and call and the power to purchase without delay, even on a holiday.

Normally, in a higher purchase scheme it takes about seven days to get all the required papers cleared. K-value members would be given additional benefits, like competitive price and others which would be declared later.

How is the scheme faring and who are your competitors?

It is too early to comment, as I have said earlier the scheme is only three months old. Even though, our company has a lot of competitors in the finance industry, as far as this scheme is concerned we don't have any.

Comment about the benefits of K-value compared to credit cards?

Even though K-value and credit cards have much in similar, I feel these are on a different plane. For example, in a normal case the upper limit of a plastic card is around Rs 15,000, where as that of K-value would run into lakhs depending upon the user's choice.

A credit card is good for purchasing comparatively low priced items, when with a K-value card the minimum purchase should be of Rs 10,000.

Won't the ready availability of money in this scheme, like in credit cards work on the psyche of the consumer, resulting in an impulsive buying?

Of course, it will. But it will also help the user to purchase and build up a home, which in a savings method would take years to achieve.

The customer is treated as the king, for he doesn't have to knock at several doors to purchase a fridge or a TV as in the higher purchase scheme.