Fullerton forays into consumer, auto finance

At a time when big players are wary of financing the purchase of consumer durables and two-wheelers, non-banking finance company Fullerton India Credit Co has decided to foray into both the segments.

While the company is staying away from financing white goods for the time being, it has decided to extend loans for purchase of computers and laptops.

To start with, Fullerton is tying up with HCL Infosystems. As part of the deal, it will provide loans for durables to the salaried class and self-employed professionals.

A source said that, for the moment, the company did not intend to enter the market for conventional consumer durables such as refrigerators, television sets and washing machines as the segment has a very small ticket size.

 

The average ticket size that Fullerton is targeting is Rs 25,000-30,000.

It has already tied up with Hero Honda for providing loans for the purchase of two-wheelers, basically targeting the mass market segment in tier-2 and tier-3 towns.

In recent weeks ICICI Bank has announced its plans to scale down two-wheeler finance while it is allowing only its cardholders to purchase consumer durables as it has ended the system of post-dated cheques. A host of other lenders, including many NBFCs, are exiting the sub-Rs 50,000 market.

A company spokesperson said that Fullerton’s foray into consumer financing is a part of an overall strategy as it feels that it is a conducive time to enter the segment.

He said that is a large unbankable segment that exists in the tier 2 and tier 3 towns that be tapped through the neighbourhood finance model.

During 2007-08, the NBFC disbursed loans to the tune of Rs 3,500 crore and is acquiring 75,000 new customers every month. The company’s bad debt was estimated at around 3 per cent.