Finance Firms Stay Afloat Despite Slump

One reason for this is the recent reduction in interest rates and other charges by finance companies and certain foreign banks including Citibank, which is a major player in the consumer finance business.

In the case of cars in the upper end of the market like Cielo and Maruti Esteem, special schemes have been designed to offer one-year interest-free loan of Rs 2 lakh. The initial booking amount is also being waived in some cases.

Finance company executives say car manufacturers are bearing the brunt of the special schemes, which offer relief up to Rs 25,000 to the buyer.

The demand continues to be strong because of a big shift in consumer preference to the credit route, said Usha Martin Finance Corporation chief executive Sanjoy Banerjee.

 

White goods units have complained of a deceleration in the rate of sales growth in July-September compared to the same period last year. But finance company executives point out that the drop in sales has affected only certain segments of the market and is not an across-the-board phenomenon.

You have more players in the upper end of the consumer goods market than ever before. There has been a fall in the market share of some of the old, entrenched players as new ones have come up to challenge them. The competition among finance companies and banks has made the situation more tight, a State Bank of India official said.Officers in the personal finance wings of SBI, Bank of Baroda and Punjab National Bank said there has been no sign of a decline in the credit demand.