I-Credit Gears Up For Auto Finance Foray

ICICI Credit Corporation (I-Credit), the non-banking finance arm of ICICI, has recently signed MoUs with Ashok Leyland Finance and Apple Finance as a part of its foray into the retail auto finance segment.

This will enable I-Credit to do joint activities with the two companies.

The signing of the MoUs mark ICICI Credit's entry into the field of retail finance, after six months of operation in asset securitisation and factoring.

'ICICI Credit is also in the process of working out similar arrangements with other non-banking finance companies (NBFCs) which have extensive branch networks,'' sources said.

As per the MoU, Ashok Leyland Finance and Apple Finance will act as marketing and collection agents, for which they will be paid a commission by I-Credit.

 

Payments to vehicle suppliers will be made directly by I-Credit, which will in turn receive customers' dues from the agents.

'ICICI also plans to pursue the take-over route to get a ready-made network and there would be more mergers of NBFCs with ICICI in the next two months,' sources added.

The merger of ITC Classic with ICICI, for instance, will provide the latter with an instant branch network that could be used as deposit mobilisation centres and auto finance outlets, too.

There are also possible synergies arising out of ITC Classic's depositor base of seven lakh.

ICICI Credit, which mobilises deposits on behalf of ICICI, had recently appointed around 3,500 agents all over the country for this purpose.

Some of these agents would now also qualify as agents for the auto finance business, the sources said.

Other areas that I-Credit is looking at is consumer finance, hire purchase and leasing. Details will be worked out after the basic infrastructure is put in place, they added. ICICI Credit is a 100 per cent subsidiary of ICICI and operates on a credit line of Rs 250 crore and equity of 100 crore from ICICI.

The tie up for collection makes sense for I-Credit and none the companies in the ICICI group have the experience for redressing retail defaults.

This needs setting up of a large network of collection agents which is avoided by the signing of the MoU.