Chequeless loan scheme from Bajaj for rural areas

Written by: Rama Mohan
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MUMBAI, Jan 19: Bajaj Auto, the second largest two-wheeler maker in India, is all set to capture rural and semi-urban two-wheeler market with its special finance scheme from its Bajaj Auto Finance, where the rural customer could buy Bajaj two-wheeler without having a bank account.

Analysts say that the new scheme of Bajaj will challenge the market leader Hero Hona in rural and small towns. Hero Honda sells more than half of two-wheelers in the country. As part of the fiance scheme, Bajaj has appointed 135 dealers in small towns and mini metros, where previously it had just 25 dealers.

Under the scheme, customers, who buy Bajaj two-wheeler on loan, need not produce post-dated cheques. “We are reinventing our marketing and distribution strategy to keep up our growth momentum," Bajaj Auto motorcycle business president S Sridhar said. The company's move is to address a bigger market, he added.

Bajaj appointed new dealerships will operate from March end and six out of its every 10 new dealerships are in semi-urban areas like Hingoli of Maharashtra. The rest of dealerships are in mini-metros semi-urban areas and small metros like Pune and Nagpur.

The company is to collect the loan instalments from customers directly. The customer can pay the loan instalments in cash, instead of cheques, under the scheme. “The loans will be given on the basis of trust and initial verification and there will be no collateral," Sridhar said. This method has already been tried by the company in some areas. Default rate in this 'cash' method is said to be much less than the post-dated cheque system.

The company is also mulling seasonal collections of the loans from rural areas, where rice and wheat is harvested. The company hopes that improved economic condition of rural dwellers will help to push up its new fiance scheme and increase its sales. “Bajaj Auto will be able to improve its market share to more than 30 per cent with the rural push," Sridhar said.

Presently, Hero Honda's share in Indian two-wheeler market is 54 per cent, whereas Bajaj's share is 27 per cent. However, Discover, Bajaj's most popular bike in rural areas, brings 45 per cent of its sales.The new finance scheme is hoped to help Bajaj to tap rural Indian market of two-wheelers.

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