Financial Services Company Magma Shrachi Finance announced their entry into personal loan business, with main focus on rural and semi-urban market. Magma Shrachi Vice-Chairman and Managing Director Sanjay Chamria said preparations for the launch of the product in northern and southern India is complete and by June the product will be launched in all the locations.
He added "We are launching (the product) in 54 locations across India and already have set up our team to manage the business."
Company sources said at the time of filing to the Bombay Stock Exchange the company has a target of initial monthly turnover of Rs 30 crore and hopes to increase it up subsequently.
"The company will offer the product to salaried, self-employed professional and non-professionals," he said.
The company sources said that in the country several leading players have withdrawn from personal loan market but it will continue to focus on the rural and semi-urban market.
Wednesday, May 28, 2008
Monday, May 19, 2008
Retailers’ latest offer loans for shoes and groceries
People who are obsessed to purchases, but find hard to afford, there is good news for them retailers are offering a helping hand — with loans that are small and interest-free. Now you can take loan for buying even a pair of shoes or for your monthly grocery purchases with loans.
In New Delhi at Reliance Retail Ltd’s footwear store, Reliance Footprint, which opened in January, consumers can help themselves to zero-interest loans for as low as Rs5,000 on buying shoes.
For instance you like a-pair Gecco shoes prices at Rs18,000, but can’t afford it, the firm will promptly finance it through the company’s tie-up with ICICI Bank Ltd — also at zero interest. The customer should have a banking relationship with ICICI Bank or HDFC Bank Ltd. Recovering the loan is the task of the bank.
The plan, in its initial stage, is having very few takers; hardly 10 people have already purchased shoes through financing at the New Delhi store in the last five months. It is believed that in the near future the number will increase with the awareness.
Mostly people take loans for home furniture to consumer electronic items which run in the mid to high thousands, retailers say the loan size could go so low that consumers could fund even their monthly grocery purchases with loans. “The ability to convert a one-time investment into an over-a-period-plan always improves the purchasing capability of people,” says Muralidhara Kadaba, president and chief executive for finance and travel, Reliance. “You make customers aspire for things they otherwise may have postponed or might settle for something that maybe compromising.”
Pankaj Rana, a catering service business owner, hasn’t bought his groceries on loans yet, but has liked the loan idea. On a grocery shopping visit to Big Bazaar in Wazirpur in north Delhi earlier this month, he ended up buying an LG television set through finance. “I was walking around the store and saw the TV on display… Store staff explained the finance option and I liked it,” says Rana. “You pay Rs700-800 per month as installment and it doesn’t affect your pocket much.”
Not everyone is as easy to convince as Rana, and Reliance is finding out that the mindset is hard to change.
“People don’t want to take EMI (equated monthly installments) on shoes,” admits R.K. Azad, manager for the Reliance Footprint store in Mayur Vihar in east Delhi. Referring to the consumer mindset that prefers to pay through credit and debit cards rather than taking small loans he said, “Rather, they would use plastic money.”
Although, credit card loans attract an interest payment, the concept has been widely in use in India for well over a decade now. Retailers believe that loans still need to score through the mindset in a country raised on a proverb of “saving for a raining day”.
“Somehow it hasn’t picked up in India,” admits Rakesh Kakkar, chief executive of Future Money, the consumer finance arm of Future Group. According to Kakkar major share of loan for consumer products is restricted to “high-ticket” products, including LCD television sets and expensive furniture. He added if we compare globally, 30-35% of consumer durable items are purchased through financing while it is just between 4-5% in India. On an average at Future Group’s Big Bazaar hypermarket in Wazirpur, the number of consumers opting for loans to purchase consumer durable items is still very small. According to officials of hypermarket finances, there are about five consumers to buy electronic items to furniture in a month.
Undeterred, Future Group, the parent of the country’s largest retailer Pantaloon Retail (India) Ltd, company official on condition of anonymity because they are not authorized to give out the details for the plan this early said the company is planning to introduce a card where consumers can make purchases of up to Rs3, 500 on grocery shopping, because they are not authorized to give out the details for the plan this early. No further details were available.
“We may look at grocery (financing) sometime later,” Kakkar says, but he declined to comment on the card with a Rs3, 500 credit limit.
However Kakkar, informed that company has plans to introduce loans for purchases of Rs5, 000 on apparel, jeweler and health and wellness products among others from the current minimum finance of Rs7, 000 on consumer electronics and furniture in the next two months.
Reliance Retail is also planning to launch cards which will allow consumers to shop on credit at Reliance Retail-owned stores. Similarly, Reliance also plans to widen the reach of its financial arm, selling everything from loans to insurance to a large number of its stores.
Besides this India’s largest discount retailer Subhiksha Trading Services Ltd has also tied up with financial firms to offer loans on mobile phones priced at Rs5, 000 and above. But it is sceptical whether consumers would want to buy their monthly grocery through financing.
“I am not very sure that customers are looking for financing for grocery at the moment,” says R. Subramanian, managing director of the Chennai-based Subhiksha. “It’s a month-on-month thing and why would anybody need financing?” he asked. Sharing his experiences in selling mobile phones through financing, he says, “Typically, nobody avails loans for buying mobile phones for Rs3, 000.”
Schoolteacher Ritu Sood is a case in point. She has a budget of about Rs10, 000 per month for her family of six, but it’s a clear “no” for her when it comes to taking loans on her grocery purchases.
“I don’t think so….We don’t need loans on that,” she says while pushing a trolley of grocery items in Big Bazaar in Wazirpur area.
However, Azad is trying to convince middle-class Indians that it’s okay to walk in borrowed shoes.
In New Delhi at Reliance Retail Ltd’s footwear store, Reliance Footprint, which opened in January, consumers can help themselves to zero-interest loans for as low as Rs5,000 on buying shoes.
For instance you like a-pair Gecco shoes prices at Rs18,000, but can’t afford it, the firm will promptly finance it through the company’s tie-up with ICICI Bank Ltd — also at zero interest. The customer should have a banking relationship with ICICI Bank or HDFC Bank Ltd. Recovering the loan is the task of the bank.
The plan, in its initial stage, is having very few takers; hardly 10 people have already purchased shoes through financing at the New Delhi store in the last five months. It is believed that in the near future the number will increase with the awareness.
Mostly people take loans for home furniture to consumer electronic items which run in the mid to high thousands, retailers say the loan size could go so low that consumers could fund even their monthly grocery purchases with loans. “The ability to convert a one-time investment into an over-a-period-plan always improves the purchasing capability of people,” says Muralidhara Kadaba, president and chief executive for finance and travel, Reliance. “You make customers aspire for things they otherwise may have postponed or might settle for something that maybe compromising.”
Pankaj Rana, a catering service business owner, hasn’t bought his groceries on loans yet, but has liked the loan idea. On a grocery shopping visit to Big Bazaar in Wazirpur in north Delhi earlier this month, he ended up buying an LG television set through finance. “I was walking around the store and saw the TV on display… Store staff explained the finance option and I liked it,” says Rana. “You pay Rs700-800 per month as installment and it doesn’t affect your pocket much.”
Not everyone is as easy to convince as Rana, and Reliance is finding out that the mindset is hard to change.
“People don’t want to take EMI (equated monthly installments) on shoes,” admits R.K. Azad, manager for the Reliance Footprint store in Mayur Vihar in east Delhi. Referring to the consumer mindset that prefers to pay through credit and debit cards rather than taking small loans he said, “Rather, they would use plastic money.”
Although, credit card loans attract an interest payment, the concept has been widely in use in India for well over a decade now. Retailers believe that loans still need to score through the mindset in a country raised on a proverb of “saving for a raining day”.
“Somehow it hasn’t picked up in India,” admits Rakesh Kakkar, chief executive of Future Money, the consumer finance arm of Future Group. According to Kakkar major share of loan for consumer products is restricted to “high-ticket” products, including LCD television sets and expensive furniture. He added if we compare globally, 30-35% of consumer durable items are purchased through financing while it is just between 4-5% in India. On an average at Future Group’s Big Bazaar hypermarket in Wazirpur, the number of consumers opting for loans to purchase consumer durable items is still very small. According to officials of hypermarket finances, there are about five consumers to buy electronic items to furniture in a month.
Undeterred, Future Group, the parent of the country’s largest retailer Pantaloon Retail (India) Ltd, company official on condition of anonymity because they are not authorized to give out the details for the plan this early said the company is planning to introduce a card where consumers can make purchases of up to Rs3, 500 on grocery shopping, because they are not authorized to give out the details for the plan this early. No further details were available.
“We may look at grocery (financing) sometime later,” Kakkar says, but he declined to comment on the card with a Rs3, 500 credit limit.
However Kakkar, informed that company has plans to introduce loans for purchases of Rs5, 000 on apparel, jeweler and health and wellness products among others from the current minimum finance of Rs7, 000 on consumer electronics and furniture in the next two months.
Reliance Retail is also planning to launch cards which will allow consumers to shop on credit at Reliance Retail-owned stores. Similarly, Reliance also plans to widen the reach of its financial arm, selling everything from loans to insurance to a large number of its stores.
Besides this India’s largest discount retailer Subhiksha Trading Services Ltd has also tied up with financial firms to offer loans on mobile phones priced at Rs5, 000 and above. But it is sceptical whether consumers would want to buy their monthly grocery through financing.
“I am not very sure that customers are looking for financing for grocery at the moment,” says R. Subramanian, managing director of the Chennai-based Subhiksha. “It’s a month-on-month thing and why would anybody need financing?” he asked. Sharing his experiences in selling mobile phones through financing, he says, “Typically, nobody avails loans for buying mobile phones for Rs3, 000.”
Schoolteacher Ritu Sood is a case in point. She has a budget of about Rs10, 000 per month for her family of six, but it’s a clear “no” for her when it comes to taking loans on her grocery purchases.
“I don’t think so….We don’t need loans on that,” she says while pushing a trolley of grocery items in Big Bazaar in Wazirpur area.
However, Azad is trying to convince middle-class Indians that it’s okay to walk in borrowed shoes.
Friday, May 16, 2008
SBI, GE Money to expand JV to personal loan and credit insurance segments
State Bank of India (SBI) and GE Money are trying to repair their joint venture after a brief period of strain over bad debt and losses at SBI Cards, the country's second largest card company. The SBI Card JV will continue to operate, under two separate JVs: SBI Cards & Payment Services Pvt. Ltd. (SBICPSL), which focuses on the marketing and distribution of SBI Cards, and GE Capital Business Processes Management Services Pvt. Ltd. (GEBPMSL), which handles the technology and processing needs of the JV.
SBI and GE Money have jointly announced to expand their 10 year old strategic partnership to a new level of growth and expansion in the future. A meeting was held between Mr. O. P. Bhatt, Chairman, State Bank of India and Mr. Yoshiaki Fujimori President & CEO, GE Money Asia in which it was decided SBI and GE would maintain the same percentage of ownership in both the ventures.
The JV partners also agreed to nominate Mr. Diwakar Gupta, one of the top executives of State Bank of India, as the CEO of SBI Cards & Payment Services Pvt. Ltd.
Under the new strategic initiative, SBICPSL will be better positioned to participate in the high-growth consumer financial services industry by offering other consumer financial products, such as personal loans and credit insurance, effectively expanding the scope of the JV. This move is a natural extension of the JV's leadership in the credit card space, and the success enjoyed by both partners. By cross-selling related financial services and products to its existing large pool of customers, the JV will also be offering an enriched portfolio of products to help customers realize their financial needs.
GEBPMSL will control the scale of its processing platforms to serve other providers in India, in addition to SBI Card's products and services.
After the bank's annual results Mr Bhat told the reporters that the bank has plans to turn around the cards business. He pointed out," India's rapidly expanding financial services sector offers several business opportunities and State Bank of India will be pleased to exploit these opportunities, in partnership with a global giant like GE, wherever possible."
He added SBI was also unhappy with GE's decision to partner LIC for its credit card venture. However, with GE Money reviewing its Indian operations, the senior management has not shown much interest in pursuing the venture. LIC's MoU with GE entered into last year was valid for 90 days and has since expired. The card business was to be launched on April 1, but there has been no movement on this business. LIC may review its business plan in consultation with Corporation Bank.
SBI and GE Money have jointly announced to expand their 10 year old strategic partnership to a new level of growth and expansion in the future. A meeting was held between Mr. O. P. Bhatt, Chairman, State Bank of India and Mr. Yoshiaki Fujimori President & CEO, GE Money Asia in which it was decided SBI and GE would maintain the same percentage of ownership in both the ventures.
The JV partners also agreed to nominate Mr. Diwakar Gupta, one of the top executives of State Bank of India, as the CEO of SBI Cards & Payment Services Pvt. Ltd.
Under the new strategic initiative, SBICPSL will be better positioned to participate in the high-growth consumer financial services industry by offering other consumer financial products, such as personal loans and credit insurance, effectively expanding the scope of the JV. This move is a natural extension of the JV's leadership in the credit card space, and the success enjoyed by both partners. By cross-selling related financial services and products to its existing large pool of customers, the JV will also be offering an enriched portfolio of products to help customers realize their financial needs.
GEBPMSL will control the scale of its processing platforms to serve other providers in India, in addition to SBI Card's products and services.
After the bank's annual results Mr Bhat told the reporters that the bank has plans to turn around the cards business. He pointed out," India's rapidly expanding financial services sector offers several business opportunities and State Bank of India will be pleased to exploit these opportunities, in partnership with a global giant like GE, wherever possible."
He added SBI was also unhappy with GE's decision to partner LIC for its credit card venture. However, with GE Money reviewing its Indian operations, the senior management has not shown much interest in pursuing the venture. LIC's MoU with GE entered into last year was valid for 90 days and has since expired. The card business was to be launched on April 1, but there has been no movement on this business. LIC may review its business plan in consultation with Corporation Bank.
Wednesday, May 14, 2008
GE Money personal loans, mortgage biz portfolios find no takers
GE Money India wants to sell its mortgages portfolios and personal loan and has been searching for the right party but it seems, it has not been able to find the takers for its portfolios. Although some interested parties have quoted but it has not been up to the mark of the company’s expectation. The bidders are of a view that this can ultimately lead to the proposed divestment plan being scrapped.
According to sources recently the bidders have informed Morgan Stanley, advisor to GE Money India that their assessments are in the range of $150-200 million. Whereas GE Money had pegged the base price of these two businesses at $400 million - the amount it had invested in them - and was looking for a premium over this.
They added the businesses, which are on the block have lost their charm as the result of the US subprime crisis and subsequent depreciation of personal and mortgages portfolios across the globe. Subsequently the portfolio quality has also declined for most of the players in India because of the aggressive methods being used by the collection agents hired by the regulators.
Experts are of the view that the situation is unlikely to get better in a year or so.
"Under the changed scenario, the attraction for GE's businesses could be their network. But we did not find merit in quoting more than $200 million for the network which we can built across the country in a year or so," said a source close to one of the bidders. It has 180 offices in 120 towns with 450 full-time employees and 2600 contingent staff.
A source close to another bidder said, "We are not very confident about quoting anything near to GE's expectation as we believe delinquencies in most retail businesses in India are going up, with GE being no exception. In fact, that's why big banks are slowing withdrawing themselves from the personal business."
When ET reporter contacted GE Money India, the company spokesperson said, "As mentioned in the past, we have received strong expressions of interest for a likely partnership for our wholly-owned personal loans and mortgages portfolios. The process of review is still underway and hence we will not be able to respond to speculations or make any comments until such time that a final decision is made. GE Money remains steadfastly committed to India as a market for long-term growth and investment."
Code-named 'Project Intrepid', four months ago GE had put GE Money Housing Finance (excluding home loans distributed through a JV with Wizard home loans) and the personal loans business known as GE Money Financial Services on the block.
Around 40 companies including Tata Capital, Future Group, India bulls, the Aditya Birla Group and Carlyle carried out the due diligence. Reliance Capital had stepped back from the race in the initial days of the sale process citing the “high asking price.” GE Money India has planned an arrangement with Australia-based Wizard Home loans, a subsidiary of GE Money worldwide.
GE Money announced about this planned tie-up in September 2007. Company officials had talked of a $200-million equity investment and of building $2-billion home loan portfolio by 2011.
According to sources recently the bidders have informed Morgan Stanley, advisor to GE Money India that their assessments are in the range of $150-200 million. Whereas GE Money had pegged the base price of these two businesses at $400 million - the amount it had invested in them - and was looking for a premium over this.
They added the businesses, which are on the block have lost their charm as the result of the US subprime crisis and subsequent depreciation of personal and mortgages portfolios across the globe. Subsequently the portfolio quality has also declined for most of the players in India because of the aggressive methods being used by the collection agents hired by the regulators.
Experts are of the view that the situation is unlikely to get better in a year or so.
"Under the changed scenario, the attraction for GE's businesses could be their network. But we did not find merit in quoting more than $200 million for the network which we can built across the country in a year or so," said a source close to one of the bidders. It has 180 offices in 120 towns with 450 full-time employees and 2600 contingent staff.
A source close to another bidder said, "We are not very confident about quoting anything near to GE's expectation as we believe delinquencies in most retail businesses in India are going up, with GE being no exception. In fact, that's why big banks are slowing withdrawing themselves from the personal business."
When ET reporter contacted GE Money India, the company spokesperson said, "As mentioned in the past, we have received strong expressions of interest for a likely partnership for our wholly-owned personal loans and mortgages portfolios. The process of review is still underway and hence we will not be able to respond to speculations or make any comments until such time that a final decision is made. GE Money remains steadfastly committed to India as a market for long-term growth and investment."
Code-named 'Project Intrepid', four months ago GE had put GE Money Housing Finance (excluding home loans distributed through a JV with Wizard home loans) and the personal loans business known as GE Money Financial Services on the block.
Around 40 companies including Tata Capital, Future Group, India bulls, the Aditya Birla Group and Carlyle carried out the due diligence. Reliance Capital had stepped back from the race in the initial days of the sale process citing the “high asking price.” GE Money India has planned an arrangement with Australia-based Wizard Home loans, a subsidiary of GE Money worldwide.
GE Money announced about this planned tie-up in September 2007. Company officials had talked of a $200-million equity investment and of building $2-billion home loan portfolio by 2011.
Tuesday, May 6, 2008
Enjoy foreign trip, pay in EMIs
To go on a foreign tour for vacation is no longer a dream. This vacation enjoy with your family in Bangkok and pay in EMIs, this mantra being chanted by travel agencies to attract customers who wish to go to Bangkok and Malaysia but unable to afford the trip.
The agencies, in alliance with banks, are offering loan facilities for customers to pay for membership in holiday clubs.
Sony Mehta, the owner of Skyline Travels, pointed out that they are providing loan through a tie-up with ICICI Bank.
“We have tied up with ICICI Bank for personal loans. Our customers can pay EMIs according to their convenience. The trend of taking loans for vacations is slowly catching on as several people want to visit places such as Singapore, Mauritius and Bangkok but cannot get the money up front,” Mehta said.
He added this has also made possible for the middle class, “easier even for the middle class to enjoy foreign tours, which was not a possibility some time ago”.
“They can take a loan for a trip and, in some cases, need to pay EMIs of only Rs 3,200 for three years. This is an easy system,” Mehta added.
The travel agent reported that this season the craze to travel abroad on vacations has increased. “We already have 10 clients who are going to Bangkok on bank loans,” Mehta added.
Neeraj Singh, the proprietor of Club Mahendra Holidays, said they have introduced a 25-year membership option. Membership fee ranges from Rs 1.31 lakh to Rs 6.65 lakh.
“We have 3,700 resorts all over the country and a member can holiday in any one of our resorts located at places such as Manali, Goa and Bangkok. We have facilities such as kitchens at these resorts,” said Singh. Apart from this members can also get a week of free holiday every year.
Regarding the loan repayments Singh said, members can pay EMIs of Rs 3,201. “This summer, demand has been pouring in for memberships and we have approximately 300 to 400 members in Jharkhand. More are joining,” Singh added. Anuj Kapoor, a government official, has also planned spending his summer holiday at Bangkok.
“It was through our friend that we learnt about the loan facility for holidays. My family was quite happy to hear about such an option,” Kapoor added.
The agencies, in alliance with banks, are offering loan facilities for customers to pay for membership in holiday clubs.
Sony Mehta, the owner of Skyline Travels, pointed out that they are providing loan through a tie-up with ICICI Bank.
“We have tied up with ICICI Bank for personal loans. Our customers can pay EMIs according to their convenience. The trend of taking loans for vacations is slowly catching on as several people want to visit places such as Singapore, Mauritius and Bangkok but cannot get the money up front,” Mehta said.
He added this has also made possible for the middle class, “easier even for the middle class to enjoy foreign tours, which was not a possibility some time ago”.
“They can take a loan for a trip and, in some cases, need to pay EMIs of only Rs 3,200 for three years. This is an easy system,” Mehta added.
The travel agent reported that this season the craze to travel abroad on vacations has increased. “We already have 10 clients who are going to Bangkok on bank loans,” Mehta added.
Neeraj Singh, the proprietor of Club Mahendra Holidays, said they have introduced a 25-year membership option. Membership fee ranges from Rs 1.31 lakh to Rs 6.65 lakh.
“We have 3,700 resorts all over the country and a member can holiday in any one of our resorts located at places such as Manali, Goa and Bangkok. We have facilities such as kitchens at these resorts,” said Singh. Apart from this members can also get a week of free holiday every year.
Regarding the loan repayments Singh said, members can pay EMIs of Rs 3,201. “This summer, demand has been pouring in for memberships and we have approximately 300 to 400 members in Jharkhand. More are joining,” Singh added. Anuj Kapoor, a government official, has also planned spending his summer holiday at Bangkok.
“It was through our friend that we learnt about the loan facility for holidays. My family was quite happy to hear about such an option,” Kapoor added.
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