Automated lending drives vehicle credit in ICICI

ICICI Bank has said that its auto loan portfolio has been growing at 18% year-on-year as of December 2018, which is double the 8.8% growth recorded by banks in the vehicle loans category according to RBI data.

The private lender has said that loan growth is being driven by its ‘Insta’ line of loans, where the appraisal and sanction are done by analytics software without human intervention. The bank’s auto loan portfolio stood at Rs 56,000 crore as of December, which is almost 28% of the nearly Rs 2 lakh crore of auto loans outstanding in the banking sector.

According to ICICI Bank executive director Anup Bagchi, the large retail depositor base has helped to grow the portfolio. Even though auto sales have not been increasing, the lender has managed to increase the share of financed car and two-wheeler purchases. “Because we have the borrowers’ deposit accounts, we know the steadiness of their income and their outgo. This, coupled with credit bureau information, which provides their repayment track record, enables us to instantly score the customer and sanction the loans without human intervention,” said Bagchi.

By running its analytics software on its customer base, ICICI Bank has already approved 20 lakh accountholders to avail the final sanction letter of a car loan instantly and digitally up to Rs 20 lakh for a tenure of up to seven years. It has also approved 1.2 crore customers for an ‘Insta Two-Wheeler Loan’, up to Rs 2 lakh for a tenure of up to three years. Both the facilities will offer 100% of the on-road price of the vehicle.

According to Bagchi, the sanction letter, which can be generated online, enables the customer to bargain with the auto dealer. “The Insta auto loan has removed congestion in the credit delivery process and has actually shifted the power to the customer,” Bagchi said. Another distinction in the Insta auto loan is that the borrower can get a loan for more than 100% of the vehicle value as it covers the entire on-road cost.

According to Ravi Narayanan, head - secured assets, ICICI Bank, the lender has been leveraging data analytics and technology, to provide an instant credit card, instant personal loan, and instant digital credit called ‘pay later’.