“We put in over two years of work on the back-end, integrating car dealership APIs (application program interfaces) with the bank. We can already underwrite loans to non-customers, allowing us to complete the process digitally end-to-end,” said Arvind Kapil, Head of Retail Assets at HDFC Bank. In addition, customers will have a 10-day “free search” period during which they can cancel the transaction (and the loan) without any costs. According to Kapil, this is a first not only for the country but internationally. “We have reason to believe that no other regular bank has this capability and we are probably the first in the world to offer it,” Kapil said.
Typically, once a potential buyer finalizes a car, the dealership or financier sends a representative to complete the documentation and the sanction and payout process takes a few days. The Xpress car loan offered by HDFC Bank allows a walk-in customer to complete the KYC process using Aadhaar or video KYC for the loan to be sanctioned. The dealer takes care of the mortgage and other requirements.
According to Kapil, the bank developed its strategy keeping in mind that growth in auto loans should come from smaller centers. “It would significantly reduce our operational expenses. It would also benefit dealers, who typically benefit from inventory financing by lowering their interest costs,” Kapil said.
The bank should, however, continue to maintain its physical sales and collection services. “We have an efficient collection service in each PIN code. As a result, our 90-day overdue payment is half the industry level,” Kapil said.