The document discusses consumer durable loans, which facilitate the purchase of home appliances through manageable EMI options, typically requiring a down payment of 20-25% and a repayment period of 12-60 months. It highlights key aspects like credit screening procedures, revenue models involving various fees and charges, and the growth prospects of India's consumer electronics market, driven by rising disposable incomes and a favorable demographic trend. The market for appliances is projected to grow significantly, with increased access to credit and widening online sales contributing to this expansion.

1. CONSUMER FINANCE
FINANCIAL SERVICES

2. Topics
● Introduction to Consumer Finance
● Payment period and Rate of Interest
● Credit Screening
● Revenue Model
● Industry & Road Ahead
● Key Players

3. Introduction
● Consumer durable loans are small loans which help a customer to buy home appliances
with easy EMI options
● This type of loan is used exclusively to purchase durable products like washing machines,
refrigerators, TVs, VCRs, scooters, home appliances, computers etc.
● The main suppliers of consumer credit are foreign & commercial banks ,finance companies
● The consumer durable loan comes in use when a customer wants to upgrade their lifestyle
but cannot help because of the lack of liquid fund
● The loan amount is disbursed directly to the seller’s account and the repayment of the loan
happens in installments

4. Payment Period and Rate of Interest
● The payment period range between 12 - 60 monthly installments
● The down payment ranges between 20-25% of the cost
● The rate of interest is normally expressed at a flat rate; the effective rate of
interest is generally not disclosed
● In some schemes, the rate of interest is not disclosed, instead the EMI
associated with the different repayment periods is mentioned
● They also provide for either a rebate for prompt payment and charge for
delayed payment

5. Credit Screening
● Identity - The credit screening will reveal information like name, addresses (past and
present),spouse's name, date of birth, employement (past and present), and social
security numbers.
● Credit History- Credit screenings will tell all about the person's credit history like no. of
loans availed, timely or late payments, any default in installment, types of credit
(secured or unsecured).
● Public Record – Any past evictions, bankruptcies, whether or not they paid their taxes,
and if they've ever received any civil judgments. Once the previous information has
been discovered, one will able to make the best judgment on whether or not to approve
the applicant for a credit card, loan, housing, or employment.

6. Revenue model
Consumer Durables are processed at 0% interest rate but have some processing fee,
facilitation fee, DBD (Dealer-by-Down), MBD (Manufacturer-by-Down) and EMI Card
charges.
• EMI Card is a card where your purchase amount is automatically converted into EMIs. It
mostly facilitates 0 % interest on loan amount. It involves purchasing charge and non-
usage charge annually.
• Processing fee is 2-3% of credit amount which is charged for all service requested
• DBD is charged on % basis, it is charged from dealers.
• MBD is charged from the manufacturers of the product.

7. Industry
● The growth in India’s consumer market would be primarily driven by a favorable
population composition and increasing disposable incomes.
● The growing purchasing power and rising influence of the social media have enabled
Indian consumers to splurge on good things. Import of electronic goods reached US$
53 billion in FY18.
● Indian appliance and consumer electronics (ACE) market reached Rs 2.05 trillion
(US$ 31.48 billion) in 2017. India is one of the largest growing electronics market in
the world. Indian electronics market is expected to grow at 41 per cent CAGR
between 2017-20 to reach US$ 400 billion.

8. ● As of FY18, washing machine, refrigerator and air conditioner market in India
were estimated around Rs 7,000 crore (US$ 1.09 billion), Rs 19,500 crore
(US$ 3.03 billion) and Rs 20,000 crore (US$ 3.1 billion), respectively.
● India’s smartphone market in 2018 grew by 14.5 per cent with a shipment of
142.3 million units. India is expected to have 829 million smartphone users by
2022.
● Consumer durables index under the Index of Industrial Production (IIP) has
grown 7.5 per cent year-on-year between Apr-Dec 2018.

9. Road ahead
Indian appliance and consumer electronics (ACE) market is expected to
increase at a 9 per cent CAGR to reach Rs 3.15 trillion (US$ 48.37
billion) in 2022. Demand growth is likely to accelerate with rising
disposable incomes and easy access to credit. Increasing electrification
of rural areas and wide usability of online sales would also aid growth in
demand.

10. Key players
● Home Credit