SBI may buy stake in Tata Motors unit

India's largest lender State Bank of India may take a 49 percent stake in Tata Motors Finance, the vehicle financing unit of Tata Motors. A stake in the Tata Motors unit would allow the bank to expand into the trucks and buses segment where it currently has no presence.

Tata Motors has said in the past that it is committed to deleveraging the firm through divestments and capital raising at an appropriate time. The state-run bank has boosted its car loans business, even as other banks have exited the segment, by offering interest rates as low as 8 percent.

In the quarter ended December, its auto loan disbursals rose 46.35 percent to 130 billion rupees ($2.8 billion), from a year earlier, the paper said. At the end of December 2009, Tata Motors Finance''s book size stood at 64.9 billion rupees.