ICICI Bank gets back to financing durables

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Mumbai, May 5: A sharp growth in consumer durable finance has forced ICICI Bank to re-enter the business 18 months after it had made an exit from it. About 40% of all durables sold in the Rs 20,000 crore industry are financed today as opposed to just 10-15% a year-and-a-half back.

ICICI Bank, which has witnessed a healthy growth in the retail finance business - over 50% — in recent years, has decided to resume its consumer durables finance activity to tap the fast-growing market.

According to a dealer of consumer durables here, “By re-entering into 0% financing for consumer durables, ICICI Bank has tapped the opportunity at the right time. Penetration of consumer durables finance companies has risen from 12% to 22% in the current financial year.”

Executive director of ICICI Bank Chanda Kochhar, however, told FE the bank never quite exited this segment. The emergence of a generalised category of personal loans, which could be utilised for any kind of requirement, is sufficient to meet the demand for consumer durables purchase.

With upper-end finance companies penetrating deep into the semi-urban and rural markets to extend their credit facilities for consumer durables, the ratio of contribution from urban versus the rural market will grow from 80:20 to 60:40 by May-end 2005, industry players said.