Mahindra and Mahindra Financial Services (Mahindra Finance), a non-banking finance arm of USD 6.7 billion Mahindra Group, has got into an understanding with car makers General Motors and Hyundai to provide finance for their vehicles in the rural and semi-urban markets.

The latest move corresponds with the automakers’ plans to strengthen their presence in the rural markets, where Mahindra Finance has a fairly large network.

Mahindra Finance plans to increase lending rates by 0.50 per cent within next one month following RBI's tight monetary policies that has made home and auto loans expensive. But still the company hopes that its business will grow as automobile companies are focusing on small towns and villages.

Mahindra & Mahindra Financial Services provides finance for utility vehicles, tractors and cars. It has a network of 450 branches and targets to add 30 branches by the year end.

Last week, it has reported that National Housing Bank (NHB) would pick up 12.5% stake in Mahindra Rural Housing Finance Ltd, a wholly owned subsidiary of Mahindra and Mahindra Financial Services Ltd (MMFSL), for an undisclosed sum.

M&M Financial Services has posted a net profit increase of 24.8 per cent at Rs 26.76 crore for the quarter ended June 3, 2008 compared with Rs 21.44 crore of same period, last fiscal.