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Bangalore: There has been a significant increase in the number of customers for vehicle loans, as banks are offering loans at below the RBI-mandated base rate, reports Nandini Sen Gupta and Mayur Shetty of TNN.
It was reported that these special schemes were only for those who are willing to buy luxury car above 
40 lakh. ICICI bank is one among the banks that is offering auto loans at 9 to 9.15 percent, which is below RBIs base rate of 10 percent. Other non-bank lenders are also offering auto loans at 7.5 to 8 percent.
Financial experts say that banks will get the RBI's base rate stipulation by booking the loan at the base rate on their bookings and booking dealer payouts separately as promotional cost or brokerage cost. According to a senior source who owns a auto financing firms, "This means that if the rack rate on luxury cars is 11.5 percent, then dealer payout will mean 2 to 2.5 percent knocked off the interest rates so the effective rate of interest is actually lower than the base rate of 10 percent.
However, this financial support is only for high-end luxury cars with price tags of over 90 lakh. Another senior official said that banks are not supposed to lend loans below the base rate according to the rules set by RBI. He further stated that "Even if we assume that the car is being seen as a consumer product, such high-end and big-ticket loans cannot be passed off as consumer product loans. Besides, how can you borrow at 10.25 percent and lend at 9.15 percent?."
According to Philipp Von Sahr, president, BMW Group India, "In an effort to stimulate the market, we have chosen the path for our company financial services to develop the best financing product in India and we offer attractive offers to customers to tide over this not-so-easy market environment."
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