January 5, 2009

Banks & auto manufacturers ready, but drivers unwilling

KOLKATA, 3 Jan, 2009: Banks are ready to hand over loans to auto operators for the switch to LPG, but there are no takers. Leading public sector banks have set up core teams to handle the 'emergency' of issuing funds for green autos but they are apparently the only ones taking the issue with urgency. Auto owners, who upped their fight against the two-stroke ban on Friday, are yet to approach any of the banks. The convener of State Level Bankers Committee (SLBC) in West Bengal, United Bank of India has already prepared an auto loan package. It is linked with prime lending rate (PLR), which is now 12.25% for SBI, said an official. The banks have agreed to give loans of up to Rs 95,000. The time limit set by the government is five years, which translates to an EMI of around Rs 2,000 for an auto owner. "There will be an optional moratorium of three months on repayment.
Besides, we are thinking of exemptions on the last EMI if the track record of repayment is good," the official said, adding that SBI has instructed managers of 200-odd branches in Kolkata and Howrah for entertaining auto-loan applications. Banks have made it clear that they will not entertain defaulters unless they clear past dues. The road transport authority (RTA) would process requirements like address proof, licence, etc. "As per our discussion with the government, RTA will provide the documents," an official said. "A core team in our local head office will co-ordinate the process but where are the applications? There is none so far," said an SBI official. Allahabad Bank, UCO and UBI officials also say they have received no applications for auto loans. "If we receive even 15,000 applications, we can address each of them. Funds are not a problem, either," an Allahabad Bank official said.
Like banks, auto manufacturers also say that the problem is not with production, but with demand. Bajaj Auto has already set up a dedicated assembly line for LPG autos at its Waluj unit near Aurangabad. "We have made our calculations. Total conversion is likely to take at least six to eight months. Meeting the demand, however big, is not a problem," said Bajaj sales manager Hari Haran.

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