In order to increase its presence in the smaller cities across the nation, carmaker Honda Siel Cars India (HSCI) is asking PSU banks for financing their vehicles.

The company has recently entered into an agreement with Punjab National Bank for the car finance of its customers and for providing working capital requirements for its dealerships. This is the first tie up that the company has had with a PSU bank.

According to the agreement, PNB will offer car loans up to 90% of on-road cost at an interest rate of 10.5-11% for tenure ranging up to seven years.

HSCI Senior General Manager Marketing and Sales Jnaneshwar Sen said, "Public sector banks have strong presence in Tier II cities and we have also expanded rapidly in those places. Partnering a bank like the PNB will help us enhance our presence in these smaller cities."

"Also, PNB will provide working capital requirements to our dealers at the rate of its PLR (prime lending rate) plus one per cent," Sen added.

Presently the PLR of the bank stands at 11.5%.

Further asked if the company would tie up with PSU banks like the SBI, Sen said: "We are open to it. Definitely, we understand the strength of these banks in smaller places. But to start with, we are putting our energy behind our tie-up with the PNB.'