German luxury car manufacturer BMW India has announced plans for setting up a separate non-banking finance company (NBFC) in India by mid-2010. The new company, called BMW Financial Services or BFS, will be a 100 per cent subsidiary of its parent, BMW Group of Germany.
The purpose of this new company will be to finance purchases of BMW cars for both retail and fleet operators. Currently, BMW India has a financing arm which is part of the domestic operations that provides the same function in association with banks like HDFC and Bajaj Allianz for vehicle insurance.
“We have applied for an RBI licence to set up the NBFC. We plan to invest around $50 million, staggered over a period of two years,” said Peter Kronschnabl, President, BMW India.
He said the NBFC would not only help customers of BMW but also serve to finance other automobile brands. Since BMW’s new vehicle financing company would operate with an NBFC licence, the company says it may seek to raise money in the form of retail deposits from the public.
