NEW DELHI: Though Maruti 1000CC has not proved to be a runaway success as perceived by the Maruti Udog Limited (MUL) the public sector undertaking let the US-based Citibank make a fast buck on speculative bookings.
The bank made a quick Rs7 crore by offering amount of Rs.25000 per vehicle Since the bank itself was the authorized collection agency it made the profit by simply making entries in the forms from customers wishing to avail of the loan facility.
In an attempt to encourage speculation the MUL opened bookings for Maruti 1000CCeven before it had finalized the price of the luxury car. The bookings were opened on November 14, 1989 for a month and received tremendous response.
Apparently eager to mop up booking amounts for which it paid no interest the MUL further extended the date despite the fact that over a lakh bookings had been made against the Maruti’s decision to retain just 25000 bookings. ‘The extension of date and the availability of loans by Citibank swelled the number of booking to about 250 lakh
MUL favors Citibank
The total booking deposits totaled a whopping Rs.625 crore.
The MUL went out of the way to favor the Citibank. It did not float any advertisement or tender for inviting quotations from various banks for the award of the attractive contract Citibank was to process the booking applications and also to keep the collection account. It was also authorized to give presentation at the all-India dealers’ conference and regional conferences much before it was actually given the contract.
Though it is well known that the largest number of bookings for cars is done in the northern region of the country the bank decided to maintain the collection account at Bombay As the money remained in transit for a longer time Maruti suffered heavy loss of interest.
Maruti itself incited and encouraged people through advertisements to go in for speculative bookings through the loan facility offered by Citibank.
Article extracted from this publication >> September 6, 1991
