State Bank of India: Competitive Strategies of a Market Leader

Auto Finance

Unlike other competitors that relied on reduced interest rates to get business, SBI extended the tenure of car loans from five to seven years, thereby lowering the monthly debt repayment burden of the loan seeker. SBI entered into a tie-up with Maruti, the largest automobile manufacturer in India, to provide loans for purchase of Maruti cars at the rate of 10.05 per cent and 11.25 per cent for three years and above three years respectively. After the scheme was introduced, SBI emerged as the largest financier for Maruti cars in India and the number of Maruti vehicles financed grew by 17 per cent in the fiscal 2003-04 over fiscal 2002-03...

SBI carried out various marketing initiatives to enhance its reach. They included segregating and targeting existing high value customers, cross sales of other products, setting up call centers and outbound sales force to secure new customers. Plans were also made to utilize database marketing to pursue large and medium sized corporates, government and trade finance customers. Database marketing was expected to draw increased revenue from cross selling, lower costs and increased customer loyalty. SBI also introduced various other ways of reaching out to customers like extension of hours of work and aggressive marketing through print and television media. SBI increased daily working hours by two hours and Sunday banking was introduced...