The country’s largest lender, State Bank of India (SBI), is looking to acquire a significant stake in Tata Motors Finance (TMFL), the vehicle financing arm of Tata Motors, the largest automobile company in the country.
“Our investment committee would like the bank to take part in the deal and invest some amount (in Tata Motors Finance),” said SBI Chairman OP Bhatt at the sidelines of a seminar without deliberating on the size of the deal.
The bank, however, will not be the majority shareholder. “It will not be small, it will be significant, but not a majority stake,” Bhatt said.
In 2008, SBI had acquired a 91 per cent stake in Global Trade Finance (GTFL), a factoring services company. The promoters of GTFL were Export-Import Bank of India, International Finance Corporation, Washington, and Malta-based FIM Bank.
The deal would enable SBI to gain presence in the commercial vehicle segment, Bhatt said. TMFL, on the other hand, will have access to cheaper money.
“We see a lot of synergy for us. Synergy in terms of business… the commercial vehicle segment, the bus and trucks businesses,” he said. After receiving clearance from its board, the bank will approach the Reserve Bank of India for approval.
The lender, which controls around 15 per cent of the auto loan market, has bcome aggressive in the segment in the last few years. In 2009, in order to make auto loans more attractive, SBI launched a scheme at an interest rate of 8 per cent for the first year. As on December 31, the bank’s auto loan disbursements grew by 46.35 per cent on year to Rs 13,012 crore. TMFL, though experiencing improvement in margins, has witnessed its market share decline, which the company attributed to “active competition from domestic banks.” During the first nine months of the current financial year, TMFL disbursed loans worth Rs 4,446 crore, which is lower by 18 per cent over the same period of the previous year.
