Annapurna primarily did a demand study on “Consumer durable products in rural Market” to know the demand for the consumer durables. The study revealed that most of the interviewed clients were interested in buying consumer durables products. The second most important finding was that majority of the clients use group loans for meeting their consumption needs. Even the penetration of financial institutions and dealers is very less in rural and semi-urban markets and this gap can be filled by Annapurna by positioning itself in the market as financier. To fill this gap Annapurna thought of launching a new product called Consumer Durable loan . Consumer durable Loan is a financial support given to clients who are unable to make payment at one shot for buying consumer durable products. With the help of this product, they can fulfill their needs but with reduced burden on them. But providing financial support won’t solve the problems of clients as mentioned in the report on “Consumer durable products in rural market”. Further, it was also stated that for buying products clients had to travel at least 10-50 km from their place of residence. Travelling to far locations increased their expenditures. Thus to solve this issue, Annapurna is tying up with a third party to provide door step delivery of the products.
Objective: The objective of launching this product is 3 folds. It aims at improving clients’ standard of living, increasing the retention rate of existing clients and attracting non-existing clients.
About Loan Product: The product is offered by individual lending method and the loan size varies from Rs. 2000-30,000. The loan is disbursed through single disbursement menthod at an interest rate of 22.5 % reducing. For every loan, a loan processing fee of 2% plus service tax is charged. The tenure of this loan varies from 6 months to 18 months. A down payment of 10% of the product proce is collected in advance. Installment payment duration would vary according to the loan size. All the loans below Rs. 5000 can be repayed annually or 6-monthly. But all the loans above Rs. 5000 have to be repayed annually only. The product provides insurance of both applicant and co-applicant as well. The repayment has to be done through cash at the branch or at the centre.
Benefits for the clients:
1. Clients can get finance upto 90% of the price of a product.
2. A wide range of options for different product categories are available for finance.
3. EMI amount is very small so easily payable.
4. The product aims to satisfy clients’ aspirations.
5. The product will be delivered to clients at their doorsteps.
6. After sales service will be provided to the clients.