Auto companies say not their line of business


With the Reserve Bank of India (RBI) allowing companies with extensive retail networks to act as business correspondents (BC), automobile companies have an additional business avenue.

Industry experts, however, said the companies might not show much interest as models for the two lines of business were different.

Maruti Suzuki India Chairman R C Bhargava said: “It is not our expertise to act as BCs on behalf of banks. We have to understand the implications of such a venture. There are no plans to explore the avenue.”

Ashwin Parekh, partner, Ernst and Young, said: “Automobile companies can act as BCs technically. However, there is no natural connection with the business that they do.” As a BC, automobile companies would have to depute people to collect and dispense cash, which they might not choose to do, he said.

Abizer Diwanji, an analyst at KPMG, agreed: “Telcos already act as service providers and they will be more comfortable in undertaking such a business. Auto companies can participate but they need to have a significant presence in rural areas.”

Maruti Suzuki, the largest car manufacturer of the country, has 802 sales outlets in 555 cities.

FMCG firms to first read fineprint

Most FMCG companies, including Dabur, ITC, Emami and Nestle, said they would study the guidelines before commenting on RBI’s move to involve companies with a large retail presence to act as business correspondents. Mails sent to HUL and P&G remained unanswered.

Dabur CEO Sunil Duggal said: “FMCG companies may not get directly involved in the programme. But they can possibly act as facilitators by encouraging their distributors to take up this kind of work.”

But the chief executive of an FMCG company said on condition of anonymity: “Banking is a different ballgame altogether. The model is vastly different from FMCG. Plus, distributors are not oriented to sell financial products. They are into everyday products like soaps, detergents, shampoos. I don’t think this financial inclusion programme can apply to us. Distribution in FMCG involves a series of intermediaries who we do not control. We are not a retailer who has a network or chain of stores. Possibly he can get into a programme like this? I don’t see how we can make a difference.”