Tata Motors, Andhra Bank ink MoU

Andhra Bank set to finance 1,500 vehicles in next five months

Tata Motors today signed a memorandum of understanding (MoU) with Andhra Bank for financing the purchases of its passenger vehicles. Andhra Bank is expected to finance 1,500 vehicles in the next five months.

"With each vehicle costing an average of about Rs 5 lakh, our total exposure will be Rs 750 crore. We will be financing 90 per cent of the total loan amount and will be reducing the interest rates by 0.5 per cent for this tie-up," R Balakrishnan, executive director of Andhra Bank, said.

The rate of interest will be 9.25 per cent on a daily reducing balance for a period of 36 months and 9.5 per cent for periods above it.

Tata Motors will be offering a special package of free accessories worth Rs 6,000 for customers who avail finance from Andhra Bank to buy the 'New Indica V2'. To sweeten the deal further, Tata Motors will pay the first premium on the vehicle insurance for customers who avail of this scheme.

Speaking to Business Standard, S Krishnan, general manager of Tata Motors said, "Tata Indica with an overall market share of 27.7 per cent, has maximum sales in Andhra Pradesh. Our revenue from Andhra Pradesh for the half-year period till September this year, has been Rs 500 crore which is about 10 per cent of our total revenue."

He added that the company entered the South African market last week and is targeting an overall growth of 15 per cent this fiscal.

Andhra Bank had earlier tied-up with Bajaj Auto and TVS Motors for two-wheeler financing and Tata Motors will be their first partner for four-wheeler financing.

"The bank has so far financed 9,000 two-wheelers with the total exposure being Rs 30 crore," Balakrishnan said. It had also tied-up with Mahindra & Mahindra and Eicher for financing tractors and has so far financed 5,030 tractors with a credit of Rs 72.40 crore.

For the current quarter, Andhra Bank has lent about Rs 150 crore in consumer loans and Rs 250 crore in housing loans, Andhra Bank CMD T S Narayanasami said.