‘Finance Is the Life Blood’: FADA Pushes for Embedded Auto Lending in India

‘Finance is the life blood of the auto industry,’ C S Vigneshwar, president of the Federation of Automobile Dealers Association, told attendees at FADA’s 5th Finance and Insurance Summit 2026 in Mumbai, describing finance and insurance as the ‘load bearing walls’ that keep dealerships financially viable.

The summit brought together lenders pushing India’s auto finance industry to move away from generic EMI products toward embedded, digital financing built directly into the car-buying process. Rajan Pental, executive director at Yes Bank, said the industry has never succeeded in building a genuinely embedded product, even as customers now arrive at dealerships fully informed about the vehicle they want, with the sale often slowed down by having to deal with multiple lenders.

Pental pointed to developed markets, where lenders and OEM captives already provide fully digital, embedded credit at dealerships or through online configurators, complete with instant decisions, e-signatures and funding tied directly to the vehicle order. Europe and the US, he said, are moving toward platform-led models where banks integrate straight into OEM, dealer and marketplace systems.

India’s auto finance market remains dominated by traditional loans, with leasing at roughly 1.5% and subscription at just 0.1%. Pental called for financing schemes tailored to individual pin codes rather than flat ex-showroom pricing, suggesting banks could use their existing technology to serve pre-approved borrowers directly.

Raul Rebello, MD and CEO of Mahindra Finance, said the industry has achieved enough scale that the rural-urban sales gap is disappearing, and that co-lending presents a fresh opportunity for innovation given how many financiers now operate at individual dealerships. Vigneshwar added that dealer partners want more transparent, demand-led wholesale funding, stronger used-vehicle retail financing, and faster insurance claims settlement.