UniversalBanking

CONSUMER FINANCE

GROUP MEMBERS
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ManaliJain(02) SnehaGohil PoojaBhatia AbbasZaidy ForamShah (11) (22) (35) (46)

KhushbooJain (60)

INTRODUCTION
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Consumerfinancehasbeenacknowledgedasagrowth sectorbybanks. Aggressivemarketingandestablishingaclientrelationship, isthekeytosuccessinconsumerfinancing. Nonbankingfinancecompaniesarebigplayersinconsumer credit. Citibankispioneerinconsumercreditandretailbanking.

MEANING
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Consumerfinanceinthemostbasicsenseofthewordrefersto anykindoflendingtoconsumers. IntheUnitedStatesfinancialservicesindustry,theterm "consumerfinance"oftenreferstoaparticulartypeof business,subprimebranchlending. ConsumerFinanceCompaniesattemptedtolendtoeveryone whowouldaccepttheirhighratesofinterest.branch lendingbecause

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Banksmadeitdifficulttoobtainpersonalcredit. Manypeoplesimplydidn'tliketodealwithbank employeesandbranches Consumerfinancecompaniesfocusedonloweringthe

DEFINITION
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ConsumerFinance
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Thedivisionofretailbankingthatdealswithlendingmoney toconsumers.Thisincludesawidevarietyofloans, includingcreditcards,mortgageloans,andautoloans,and canalsobeusedtorefertoloanstakenoutateitherthe primerateorthesubprimerate. Afinancialinstitutionthatspecializesinprovidingloans directlytoconsumerswhoareunabletosecurebankloans iscalledasConsumerFinanceCompanies.Aconsumer financecompanygenerallychargesahigherinterestrates thanabank. ExamplesofthesecompaniesincludeAmericanGeneral Finance,Inc.,DuveraFinancial,Inc.,LendmarkFinancial

ConsumerfinanceCompany
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EVOLUTION OF THE CONSUMER FINANCE MARKET

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Fromcolonialtimesthroughtheearlytwentiethcentury,mostpeople hadquitelimitedaccesstocredit,andevenwhencreditwas available,itwasquiteexpensive. Moreintenseindustrializationandurbanizationduringthelate nineteenthandearlytwentiethcenturiesdramaticallychanged themarketforsmallconsumerloans. Earlyinthetwentiethcentury,manyneworganizationsthatfocused exclusivelyontheneedsofconsumersenteredthefield,andthe structureofconsumerfinancebegantochangedramatically. Bythe1930s,awidearrayoflendersservedconsumers,including creditunions,smalllocalsavingsbanks,andanationwide networkofstatelicensedconsumerfinancecompanies.

Marketdemandandgrowingcompetitionamongthiswidervarietyof lendersspawnedfurtherinnovation,whichstartedtheeraof CreditCards

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Asearlyas1900,somehotelsbeganofferingcreditcardsto theirregularcustomers. By1914,gasolinecompaniesandlargeretaildepartment storeswerealsoissuingcreditcardstotheirmostvalued patrons. Inthe1950s,commercialbanksenteredintothecreditcard business.

AfterthecreationoftheFederalHousingAdministrationanewtype ofmortgageloanthelongterm,fixedrate,selfamortizing mortgagegrewuparoundthisoneproduct.

NEED FOR CONSUMER FINANCE

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Needforconsumerism FastgrowinginIndia,offeringexcellentscopeforlending. Topurchasenecessitiesliketelevision,refrigerator,scooter, etc. Toincreasetheprofitmarginsofconsumerfinance companiesandbanks Toexpandcreditinthemarket Forsmoothassetliabilitymanagement

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GROWTH IN CONSUMER FINANCE

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Theopportunitiesandchallengesposedbytheconsumerfinance marketinIndiaareenormousastheitisworldssecondmost populousnation. Sixyearsago,40percentofconsumerdurableswerefinanced;thishas goneupto70percenttoday.Yet,consumerfinanceisjust2.6per centofGDP. Therearemanyfactorscontributingtothischangerisingliteracy, exposuretoglobaltrendsandlifestyles. Duetoshiftinconsumerattitudetowardstakingaloantheycan benefitfromtherangeoffinanceschemesofferedbyfinanciers,tax benefits,higherloaneligibilityandavailabilityofawiderangeof productsatdifferentpricepoints.
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e.g.Personalloansi)LoanamountfromRs.25,000toRs. 5,00,000

ADVANTAGES
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Convenient Emergencies LargePurchases BuildsCredit

DISADVANTAGES
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Temptation UnrealisticLifestyle MoreExpensive

CONCLUSION
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ConsumerfinancingbusinessinIndiahasbeenonanuptrend recentlyandisexpectedtoremainsointhefuture. Tillnowmostofthegrowthhascomefromtraditionalchannelsof financing.Butgoingforward,banksandNBFCalikeneedto searchforotheravenuesforsustainingthemomentum. Thisgrowthcancomefromareaslikedevelopmentsinruralfinance, widenedgamutofcreditcardofferings,education,partnerships withMultiBrandOutletsetc. InAsiaPacific,Indiahasemergedasthethirdlargestmarketfor carsandMUVsi.e.onlyafterJapanandChina. Thelastfewyearshavewitnessedahighincreaseinstudents aspiringformanagementandprofessionalcourses,leadingtoa spurtineducationalloans.

Thenumberofstudentsavailingeducationloanshasincreasedto 1,40,000from1,08,000duringthisperiod. theloanrequirementfromlargercitieswillcontinuetogrow, explosivegrowthincreditisexpectedtoregisterintierIIcities, semiurbanandruralareas. Thelastfewyearshavewitnessedahighincreaseinstudents aspiringformanagementandprofessionalcourses,leadingtoa spurtineducationalloans. Thenumberofstudentsavailingeducationloanshasincreasedto 1,40,000from1,08,000duringthisperiod. theloanrequirementfromlargercitieswillcontinuetogrow, explosivegrowthincreditisexpectedtoregisterintierIIcities, semiurbanandruralareas.

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