Shrikant Shirke, Business Head, Two-Wheeler Loans Division, ICICI Bank

What is the proportion of two-wheeler loans in ICICI Bank’s portfolio? What are the prospects for growth?
Our business grew 30 percent over last year versus the industry’s growth of 14 percent. To date, we have financed ten lakh two-wheelers and are on target to reach 14 lakh this year. We are the market leader with a share of 40-45 percent. Most of our business naturally comes from the top three manufacturers – Hero Honda, Bajaj Auto and TVS Motor Company. We are financing two-wheelers across 1,200 cities in the country.

What will drive your growth forward?
The industry is looking at growth from semi-urban and rural areas. In our case though, a large chunk of the business comes from the top 40 cities in the country. Primarily, the rural sector still needs to develop in terms of banking habits. Reaching and servicing these customers is also large issue for us. Therefore, our plan next year is to focus on these areas as they will form an important market.

What is the focus this year then?
For the current year, our focus is very strong in giving the customer the best deal. Our customer is the two-wheeler dealer and obviously the end user. We aim to give them the best possible rate, flexible documentation, and easy processes to get loans faster. This is the focus area and it has resulted in getting market shares through our processes and better services.

What are some of the big markets for your two-wheeler loans?
The top 40 cities contribute to about 60-70 percent of our siness. Going geography-wise, we are large in Bhubaneshwar and Kolkata in east India. Our major markets in the west are Mumbai, Ahmedabad, Surat, Pune, Nagpur, Indore and Bhopal. In the north, Delhi is a strong market along with Jaipur, Chandigarh, Lucknow and Kanpur. Meanwhile, Chennai, Hyderabad, Kochi, Coimbatore, Vijayawada and Mangalore are critical for us in the south.

How will your strategy differ between urban and rural markets?
The customer in urban India is far more educated. He visits multiple dealerships and chooses the vehicle and the manufacturer he wants. In rural markets however, the entire band of vehicles are not available to a customer. Pricing also plays a very important role here. Our strategy is to move into these markets through the ASC (authorised sales and service centres of manufacturers) model. We will be available at these ASCs through our channels, employees and outsource agencies. Networking must be very strong. ICICI Bank’s presence should grow and we have already started moving in this direction. Representation of the bank in these pockets also needs to happen. Naturally, the entire norm of doing business is going to differ from the way we operate in a Mumbai or Chennai. This will extend from training our people to simplifying the documentation process. For instance, we consider an agriculture document as an income proof. We advice (rural) customers on the type of vehicle to buy and the down payment required. We will work around schemes to fit the customer profile, most of which would be an agriculture profile. In fact, we launched an agriculture profile policy two months ago in Maharashtra, Gujarat, Rajasthan, Uttar Pradesh and Tamil Nadu. We have had a positive response from customers and manufacturers. In addition, assessment of risk would be very different in the rural market. Customer needs are going to vary significantly from the urban customer in terms of down payment, loan tenure, etc. And so we are working on products that are based on the customers’ repayment cycle.

ICICI Bank recently launched its Loan on the Spot (LOTS) scheme. How will two-wheelers fit into this scheme?
The ‘loan on the spot product’ for the two-wheeler is also being worked out. It works on a similar line as auto does. For our existing bank customers, we already have a pre-approved or instant loan in place. We have a pre-approved limit in place for a customer, and he can choose any of our products. We also have a scheme where a customer can swipe a credit card, get a loan approval and choose any of the products. We have a product called ‘20 Minute LOT’, where we can approve a loan in 20 minutes from the time the customer walks in, provided he has the set documents which are very simple. We therefore have instant loans the normal route. Technology-wise, we are in the same platform as the auto portfolio. We will launch that very shortly.

Does LOTS make sense for your division since there is already a similar scheme in place?
It makes a lot of sense because the customer today wants to know if he is eligible for a loan and to what amount. If these two are taken care of, then he is not worried about the other factors. Our ‘20 Minute’ loan is different because it looks at the entire customer profile. (Unlike the LOTS scheme) He does not need to be from a certain background, have experience with the bank or a repayment track with a financier. That is the difference.

What kind of products do you have in mind to cater to new bike segments?
We are always inventing schemes depending on the model range and the geographies involved. We understand that high-end motorcycles would work in certain markets. The profile of these customers will be far different from a person buying an entry-level product. This is why most of our schemes or products are developed around the customer profile. While the industry will support us in terms of new motorcycles, our business has more or less to do with the customer segmentation we want to be in to primarily look at customer needs. For high-profile customers, we have a 50 percent down payment scheme with negligible interest because these are interest-conscious customers. On the other side, there are markets where we have as aggressive schemes as 95 percent funding. Two manufacturers – Hero Honda with the Pleasure and TVS with their pink scooter campaign – have products positioned for women. We have launched a new product called ‘Women on Wheels’ since we realised this is large segment, and we want to be present in it. We have a scheme for students. Here, the co-applicant would be a parent although the vehicle can be registered on the individual’s name. For students, we also have a step-up scheme where the installment increases each month.

Do you consider yourself to be more reactive or proactive to the market?
No, we are quite proactive. The Internet model is going to be very big for us. We have already put our name on most of manufacturers’ websites because many customers come through this channel. We have developed a model where we can fulfill a loan through the internet. So we do give in-principle approvals online. The process is very important in any financial dealing. It needs to be far simpler and easier for a customer to avail of. Our processes today are far better than anyone else in the market. Our ‘20 Minute’ loan is a very new concept in the market. In Delhi, we have launched a scheme called Loan@Home. The customer only needs to call us and we will educate him on the two-wheelers, give him the best finance option and ensure that the best vehicle is developed to him at home. These are all value editions we keep implementing farther ahead of the market.

What is your advantage over the competition?
One advantage is our reach. We are present in most markets where a two-wheeler customer would also be. We also have the best deals and high levels of services which will only get better.

What are some obstacles you could face going forward?
The larger obstacle that we would face as we go rural is the customer banking habit. We have to get into a model where we first introduce him to a bank, open an account and educate him about a banking transaction. In other words, this involves from opening a banking account to disbursing a loan to that customer.