Ola, SBI tie up for ‘daily repayment’ car loans to drivers

Taxi-hailing service Ola on Friday said the company has tied up with State Bank of India to provide car loans to drivers on its platform on a daily repayment basis. The initiative, Ola Pragati, will help drivers secure a loan of up to Rs 50 lakh for a maximum five years, with a downpayment of 10% and easier documentation. The company, which sees a monthly driver attrition rate of 3.5-4%, has mandated a minimum 60 hours of weekly service with Ola to avail the facility.

Besides, the initiative — through which Ola plans to on-board 100,000 drivers in the next couple of years — will help drivers loan 90% of the vehicle’s on-road value, including road tax. Usually, banks fund 80% of the ex-showroom value. Besides, the bank will charge an interest of 13% against the usual 14-17%.

This apart, SBI will process the loans under the Ola Pragati scheme in one working day. “This partnership with SBI brings down the entry barriers to the financing, offering anyone with the will to drive for a living. This unlocks the potential for youngsters across the country to take up driving as a respectable and lucrative career option,” said Pranay Jivrajka, VP-Operations, Ola.

Puneet Singh Arora, head, strategic initiatives, Ola, said the daily instalments will be deducted directly from the driver’s account with Ola, while the taxi aggregator will transfer the money to SBI.

Founded in January 2011 by Bhavish Aggarwal and Ankit Bhati, Ola has so far raised $277 million, including a $210-million round led by Japan’s SoftBank last October. The company is also on the verge of acquiring rival TaxiForSure in a cash-and-stock deal. The company claims to have set up a Rs 100- crore fund to enable drivers buy their own cars and is in talks with non-banking financial institutions to launch schemes similar to Ola Pragati.

State Bank of India