A developing economy like India craves for financial resources. Often the traditional financial sector is not accessible to the customers at large, thereby creating a need for financial organisations catering to specific industries. The auto industry worldwide has often faced the problem of finding the right funding for its customers. These factors, along with the cyclical nature of the auto industry, has induced automobile companies to think of captive financing arms of the parent companies, which would exclusively fund the parent products and also act as a catalyst in certain areas for promoting the products.
Tata Motorfinance (TMF), the auto financing arm for Tata Motors, came into existence in June 2003. This was a common front-end, jointly formed by BHPC (Bureau for Hire Purchase and Credit) of Tata Motors and the asset financing arm of Tata Finance. This company was a virtual entity, with both the divisions maintaining their legal identity, and was in the market for exclusively financing Tata Motors vehicles. Subsequently Tata Finance was merged with Tata Motors and in April 2005 TMF became a division of Tata Motors.