Kozhikode: The sale of cars in the state (especially in the entry level and mid segment categories) is likely to be severely affected by the State Bank of India's decision to increase the eligibility for car loans to those earning a minimum yearly income of Rs six lakhs. The earlier level was Rs 2.5 lakhs.
The decision will have an adverse impact on potential buyers as 90 per cent of those buying cars depend on bank loans, said most vehicle dealers. "First-time buyers generally opt for models like Maruti Alto or Hyundai Eon and most of them may not fall into the income bracket of Rs 6 lakh per year fixed by the SBI," said an official of Indus Motors in Kozhikode.
This decision by the largest bank in the country will have a negative impact on the overall economy of the country, said Alok Kumar Sabu, president of the Malabar Chamber of Commerce. "The danger is that other banks will also follow the same principle," he added.
In a state like Kerala with its big chunk of middle-class, a large number will be impacted by the decision. "Employees like school teachers and clerks in government and private sectors, will have a monthly income in the range of Rs 20,000-30,000 per month and all these people will be denied loan facilities," he said.
The decision, coming at a time when the economy is on a downward trend, will have a cascading impact across the board, he added.
According to an official from Popular Automobiles in Kochi, the decision will have an impact even on the sale of mid segment models such as Maruti Suzuki and Hyundai I10. This will be felt in the coming days, he added.
