PSBs to increase auto loan portfolio

Public Sector Banks (PSBs) are offering lower interest rates and organising special campaigns to increase their auto loans portfolio. This will help revive the demand for auto loans, which has been slowing down.

While the State Bank of India (SBI) is organising a special car rally for its customers, the Bank of India (BoI) and the Union Bank of India (UBI) have reduced interest rates on car loans.

The average rate of interest charged by public sector banks for auto loans is 11-12 per cent, depending on the amount and duration of loan.

SBI's Mumbai zone is organising a special campaign to promote auto loans from March 1 to April 16. The highlight of the campaign is a car rally to be held tentatively on April 20, between Mumbai and Lonavala.

The first prize is an all expense paid week-long trip to Sydney.

All those customers who avail car loans from SBI's branches in Mumbai and Thane, between March and April 20, will be eligible to participate in the rally.

UBI is specially targeting high networth individuals for auto loans, as defaults are usually less in this segment of customers.

As this segment typically changes their cars after three years, they buy new models. So, most of them will prefer to clear off their loans within three years.