Banking · Retail vs Wholesale Banking
Priya is interested in purchasing a two-wheeler and inquires about financing options. She has approached a private bank for a loan. The bank informs her that it does not focus on financing two-wheelers due to the smaller ticket size and the fact that Non-Banking Financial Companies (NBFCs) predominantly handle this segment. Priya, however, wants to know why banks generally don't focus on two-wheeler loans and why NBFCs are more involved in this segment. Why do banks generally avoid financing two-wheelers in favor of NBFCs?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1The loan repayment period for two-wheelers is too long for banks to handle efficiently.
- 2Banks only focus on financing cars and not two-wheelers.
- 3Two-wheeler loans are more often handled by Non-Banking Financial Companies (NBFCs) due to the smaller loan size and lower profitability for banks.✓
- 4The ticket size of two-wheeler loans is too large for banks to manage.
Correct answer
Two-wheeler loans are more often handled by Non-Banking Financial Companies (NBFCs) due to the smaller loan size and lower profitability for banks.
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