ICICI Bank stops two-wheeler loans at dealer's end

By Swati Khandelwal and Srujani Panda, CNBC-TV18

One of India’s auto-loans major and the largest private sector bank, ICICI Bank has decided to discontinue two wheeler loans at its dealers end. The loans now will only be available through its branches.

ICICI Bank has discontinued its two-wheeler loans at dealer's end effective August 15, 2008. The disbursal will only happen through its branches.

V Vaidyanathan, ED, ICICI Bank said, “We have doubled our branch network from 750 in 2007 to over 1,400 branches in 2008. We therefore now have the distribution required to reach out to our target population. We will originate two-wheeler loans only from these branches. This provides us an opportunity to get better quality of credit, reduce our operating cost, and leverage our branch structure better."

ICICI Bank will reduce operating costs by 30 - 40%. Their expenses had increased due to defaults. The expenses have hurt its Rs 2,000 crore two-wheeler loan portfolio.

ICICI Bank said that dealers would not be hit during festive season. They have enough inventories to see them through the season, sources at ICICI Bank said. There are no plans to halt wholesale lending.