Today I read an article mentioning
that the banks are going to “approach the Competition Commission of India
citing alleged unfair trade practices by car makers” Now, a backdrop of who
they want to fight against, is necessary.
The auto makers operating in
India like BMW, Audi, Toyota etc. have begun something called “Non Banking
Finance Companies (NBFC’s)” to provide customized finance to their customers. Looking
at the concept as a whole, it makes sense right? It wouldn’t have taken the
automakers long time to figure out their customer’s ire about the banking loan
procedures and flexibility, which in turn play a hand in shrinking the auto
market, while people may postpone their decision to purchase cars as a luxury
symbol they cannot yet afford. The companies extending to help their customers
by offering flexible repayment options and minimum hassle free paperwork
through NBFCs (set up through their own corporate affiliate companies) just
extends the bond between a company and its end consumer.
The article mentions that the
Indian car loan market is valued at Rs. 40,000 crore! And instead of banks
rolling up their sleeves and getting competitive to fight for their share in
the market, it is indeed shocking to read that the banks are approaching a
regulatory authority to “regulate” the competition. Why cite “unfair practices”?
If the banks wanted to fight for a share in this market, then they should have
done so by playing the game.
A sad picture painted by the
banks in India, portraying a child running to his Daddy to win a game of pure
ability! Will the Daddy play a patron of free market or a bully, is yet to be seen.
Note: The article referred to
here is from the Economic Times (25th Oct 2012 issue), titled “Auto
Finance: Banks to Approach CCI)
