By : Smita Gaurav Harman

Till Now

Kotak Mahindra bank ltd.

Kotak Mahindra is one of India's leading financial conglomerates, offering complete financial solutions that encompass every sphere of life. From commercial banking, to stock broking, to mutual funds, to life insurance, to investment banking, the group caters to the diverse financial needs of individuals and corporates. As on 31st March , 2007, the group had a net worth of over Rs. 3,200 crore, employing around 10,800 people in its various businesses and had a distribution network of branches, franchisees, representative offices and satellite offices across 300 cities and towns in India and offices in New York, London, Dubai, Mauritius and Singapore. The Group services around 2.6 million customer accounts.

Kotak
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. Kotak Mahindra Capital Company Ltd. Kotak Securities Ltd. Kotak Mahindra Old Mutual Life Insurance Ltd. Kotak Mahindra Prime Ltd. Kotak Mahindra Asset Management Ltd Kotak Mahindra Trustee Company Ltd. Kotak Mahindra Investments Ltd. International Subsidiaries: Kotak Mahindra Securities Ltd. Kotak Mahindra Trusteeship Services Ltd. Kotak Forex Brokerage Ltd.

Kotak Mahindra Prime Ltd.

Kotak Mahindra Prime Limited (KMPL) is a subsidiary of Kotak Mahindra Bank Ltd. The Company offers car financing in the form of loans for the entire range of passenger cars and multi utility vehicles. The Company also offers inventory funding to car dealers and has entered into strategic arrangement with various car manufacturers in India for being their preferred financier. The company has also commenced other retail lending.

Kotak Mahindra Prime Limited (KMPL)

Kotak Mahindra Prime Limited (KMPL) offers you The widest range of new and pre-owned cars: 1. Attractive car loan interest rates 2. Flexible schemes 3. Speedy loan processing Kotak Mahindra Prime Limited (KMPL) finances your car dreams with up to 90% of the ex-showroom price on your new car. Available from a minimum loan amount of Rs. 75,000 and flexible repayment tenures ranging from 12 to 60 months, you can avail of these loans on most passenger cars and multi-utility vehicles. You can choose from four schemes designed to meet your needs: 1. Margin Money Scheme 2. Step Up Scheme 3. Low EMI, Balloon Scheme 4. Advance EMI Scheme 5. Special Schemes*

Relationship between Rate of interest and demand of car loans

There is an inverse relationship between the rate of interest and demand for loan. When the Rate of interest on Car loan rises, then the demand for cars will decreases and vice-versa.

Role of RBI
RBI plays a very vital role in controlling the inflation in the economy through its monetary policy. There are 4 instruments of monetary policy which RBI takes help in reducing or increasing the demand for cars loans by making variations in the Interest rates. These are BANK RATE, REVERSE REPO RATE, CASH RESERVE RATIO.

Bank Rate
The rate at which the RBI issues loans to the Commercial banks is called BANK RATE. The process how bank rate works:
Bank Rate Costly loan from RBI to commercial banks ROI by commercial banks Demand for loan Bank Rate Less Costly loan from RBI to commercial banks ROI by commercial banks Demand for loan

Cash Reserve Ratio

Every bank is required to maintain a certain fixed percentage of their deposits with the RBI as reserves in the form of cash or gold. Presently CRR is 6%.
CRR Less resrves with Commercial banks ROI by commercial banks Demand for loan CRR More resrves with Commercial banks ROI by commercial banks Demand for loan

Reverse Repo Rate

The rate at which the commercial banks parks their excess reserves with the RBI or the rate at which commercial issues loans to the RBI. Presently RRR is 8.50 %.
RRR Reserves with RBI credit availability in market Demand RRR Reserves with RBI credit availability in market Demand

Relationship schedule between ROI and demand for car loans

YEAR 2009 2010 Rate of Interest 11.25 11.50 Demand
430,877.41

612,700.53

2011

12.50

742,214.88

EXPLANATION
As in the year 2009, the rate of interest is 11.25%, the demand of car loans is Rs.430877. In the year 2010, the rate of interest is 11.50% the demand of car loan risen to Rs.612700. In the Year 2011, the rate of Interest is 12.50%, the demand of car loan rose to Rs.742215. In all above cases the rate of interest is showing direct relationship with the demand of car loans. The factors responsible for this are:
(Continues)

 Because the reasons behind this direct relationship are: 1. LOAN-TO-VALUE RATIO. Margin Loan 2. MARGIN OF SAFETY. 3. TYPE OF RATE OF INTEREST: (A): FIXED EMIs. (B): FLOATING EMIs. 4. INCOME OF THE CUSTOMER.