Sanjay Gupta, general manager, marketing, at a Mumbai-based maritime company, had been toying with the idea of buying a home for a year, but somehow never got around to doing something about it.
A few days back, he saw a hoarding near his office fluttering with the message, "Welcome to Homes 2004."
Curious, Gupta went to the address mentioned and found himself inside a property exhibition. Moving from one stall to another, he zeroed in on a property and discovered that financing it was a breeze.
The bank offering him a loan was one of the sponsors of the exhibition, and had simplified the paperwork for it. Net result: Gupta has tied up a 20-year floating rate home loan worth Rs 35 lakh (Rs 3.5 million) at 7.25 per cent.
If this story has a happy ending for Gupta, banks are even happier. With competition in the home mortgages market hotting up, the fight for customers is both expensive and time-consuming.
To generate business, banks have to pay direct selling agents commissions to get them the right customers; moreover, the property to be financed also needs to be scrutinised properly.
Property melas and exhibitions cut short the process of customer acquisition on both counts: the properties are pre-vetted and hence need no additional scrutiny, and the customer just walks in.
Says Rajeev Sabharwal, chief operating officer, ICICI Home Finance: "Loan carnivals help banks shorten the customer acquisition time and increase business volumes."
IDBI Bank, one of the organisers of Homes 2004 in Mumbai, managed to book loans worth over Rs 60 crore (Rs 600 million) on the first day of the three-day exhibition that began on November 26.
"We expect to book over Rs 400 crore (Rs 4 billion) of business in three days," says Prashant Joshi, head of retail assets at the bank. The bank had participated in similar exhibitions in Bangalore and Chennai, and booked business worth Rs 200 crore (Rs 2 billion) and Rs 150 crore (Rs 1.5 billion), respectively.
Sujan Sinha, vice-president, retail assets, UTI Bank, says that retail loan melas attract tremendous footfalls -- potential customers drum up huge business volumes at low cost.
The basic cost for banks is around Rs 800,000-10 lakh for taking part in such loan carnivals, though the actual costs could vary depending on venue rentals. Property developers and other co-sponsors chip in with the remaining costs of organising the mela.
UTI Bank estimates that participation in one three- or four-day mela generates 30-40 per cent more business than what it usually does in a month using normal sales channels like DSAs and bank branches.
S Ramakrishnan, vice-president and business manager (retail lending) at HDFC Bank, says that such exhibitions increase the bank's visibility to customers even while lowering the cost of customer acquisition by 20-30 per cent.
When loans are directly offered to customers, there's no need to pay commissions to DSAs.
Tushar Patel, a visitor at Homes 2004, says that such exhibitions save home buyers time by presenting the best properties at one place.
In addition, the customer can also avail himself of home loans at cheaper rates as most banks tend to waive loan processing fees or offer special interest rates during such exhibitions. Customers like Patel and Gupta make such melas worth it for the home loans brigade.
