Honda seeks to ride on PSU banks for car financing

NEW DELHI: Carmaker Honda Siel Cars India is turning to public sector banks for vehicle financing to expand its presence in smaller cities across the country.

HSCI today tied up with the Punjab National Bank for car finance for its customers and also for providing working capital requirements for its dealerships. It is the first time that a car maker has forged ties with a state-owned lender.

"Public sector banks have strong presence in Tier II cities and we have also expanded rapidly in those places. Partnering a bank like the PNB will help us enhance our presence in these smaller cities," HSCI Senior General Manager Marketing and Sales Jnaneshwar Sen said.

As per the tie-up with PNB, the bank will offer car loans up to 90 per cent of on-road cost for tenure ranging up to seven years at interest rates of 10.5-11 per cent.

"Also, PNB will provide working capital requirements to our dealers at the rate of its PLR (prime lending rate) plus one per cent," Sen added. PNB has a PLR of 11.5 per cent.

Asked if the company was looking for more tie-ups with other PSU banks like the SBI, he said: "We are open to it. Definitely, we understand the strength of these banks in smaller places. But to start with, we are putting our energy behind our tie-up with the PNB."