Federal Bank has tied up with Hero MotoCorp, Honda Motorcycle and Scooter India as well as TVS Motor in India
Federal Bank debit card EMI offer is being introduced at 947 showrooms of HeroMotocorp, Honda Motorcycle and TVS Motors. Customers needn’t visit the bank to avail of it, and no processing charge will be levied. The process can be completed online, and repayment period flexibility ranges from 3/6/9/12 months.
Eligible customers can now own a two wheeler by making a payment of Re 1 only. In comparison to a conventional two-wheeler loan wherein a vehicle is hypothecated in favour of the Bank, debit card EMI purchases are not being hypothecated.
In addition to the Federal Bank debit card EMI offer, Honda Motorcycle showrooms showrooms across the country are also offering cashback of 5 percent, as festival offer. Federal Bank customers can check their eligibility by sending a SMS in the format ‘DC EMI’ to 5676762 or giving a missed call to 7812900900.
MoM vehicle purchases have been gaining favour since business restarted in a phased manner in May 2020. This can be attributed to clearing orders that were deferred from March to May 2020, and this being the ever dependable festive season, traditionally, a period of high vehicle sales. Easy finance and cash back offer is expected to provide a further boost.
Eligibility criteria will no doubt be governed by credit rating and income. Furthermore, nowhere does it say interest free EMI, which most likely means EMIs factor in principal and interest. There’s no clarity on what the interest rate is or whether this is an interest free EMI after all. But at the end of the day, the bigger question is the big shift to debit card purchases, which are made against money available in account as against credit, which is a comparatively riskier proposition for banks.
Vehicle financing is an important tool, especially when it comes to passenger and commercial vehicles. Financial commitment for a mass market daily use commuters is much lower. Now that Federal Bank is offering EMI on debit cards for customer two-wheeler purchases, the bigger question is are credit sources being limited. There’s already been ample discussion on the outcome of moratoriums offered in recent month, and opting for one automatically is a tell tale sign of repayment capacity.
Jobs in India
Finance trends are a great indicator of the economy, and debit card purchases are far too restrained when it comes to banks making cash off them since you can only spend what you have. In that sense, debit card EMIs may be tied to FDs and other financial tools that determine customer payback capacity. A job would be a good yardstick for consumer creditworthiness.
As per Centre for Monitoring Indian Economy, unemployment is pegged at 7.05 percent as a thirty-day moving-average. About 6.6 million (66 lakh) white collar jobs were lost through May and August 2020. Blue-collar job loss is placed between 5 to 10 million as per informal sector estimates. Labour force participation is low, indicating folks aren’t searching for jobs, including migrant workers who may have taken refuge with family members in rural areas.