Bajaj Auto inks MoU with Andhra Bank

Andhra Bank and Bajaj Auto have signed a memorandum of understanding (MoU) yesterday to offer two-wheeler loans to the rural populace in the state. Termed the 'Bajaj Kisan Chakra' loans would be offered to farmers at sub prime lending rates (PLR).

Addressing a press conference, R Balakrishnan, executive director of Andhra Bank, said that the bank would extend the loan to farmers at an interest rate of 9.75 per cent which is 0.75 per cent lower than the bank's prime lending rate of 10.5 per cent.

The MoU envisages close to Rs 100 crore in business through the scheme from sales of 24,000 two-wheelers in the next financial year.

"The two-wheeler industry is witnessing a consistent growth of 15 per cent per annum and is expected to continue growing the same way for the next five years. Close to 60 per cent of two-wheeler sales is through finance today and in Andhra Pradesh about 75 per cent of sales are in the rural market," B K Senapati, regional manager of Bajaj Auto, said.

Andhra Pradesh is a big market for Bajaj Auto and the company clocks close to Rs 500 crore in sales from the state every year.

Under the Bajaj Kisan Chakra scheme, Bajaj will offer buyers a Rs 1 lakh personal accident insurance policy, an additional three free services, five per cent discount on spare parts and 10 per cent discount on paid labour.

Andhra Bank, according to Balakrishnan, will match the insurance cover provided by Bajaj, with a Rs 2 lakh death cover and a Rs 1 lakh personal accident cover.