Money flow from banks to NBFCs picks up in Oct-Dec

Mumbai: Mortgage lenders such as Tata Capital Housing Finance, Piramal Capital & Housing Finance, PNB Housing Finance and L&T Housing Finance have raised nearly 80 % of the Rs 15,000 crore secured loans sanctioned by banks to HFCs in the December quarter. While PNB raised the most at Rs 5,250 crore, Piramal was a close second with Rs 3,650 crore followed by Tata and L&T. Almost 90% of this funding was contributed by public sector banks, data from the ministry of corporate affairs website and analysed by Propstack, a data intelligence provider, showed.

“Borrowing activity among non-bank lenders and housing finance companies has been largely slow. Even the December quarter showed that banks leaned towards the best-rated companies and this largely seems to be driven by the partial credit guarantee scheme,” said Sandeep Reddy, co-founder, Propstack. Data from banks is signaling that while public sector lenders are slowly opening their purse strings, risk aversion towards shadow banking and mortgage lending space still remains. Smaller and mid-sized housing finance companies like Magma and Repco managed to raise a part of the Rs 3,000 crore distributed among such firms.

State-owned banks SBI, PNB, Union Bank of India, Corporation Bank, Bank of India, Central Bank of India, United Bank of India, Karnataka Bank and Indian Bank were the major lenders. Three private banks - Yes Bank, Standard Chartered Bank and Axis Bank - sanctioned loans to this sector in the December quarter.


“Asset quality trends remain weak, given stress mainly from developer financing portfolio and some pockets of stress even in vehicle finance for select players,” a note prepared by Emkay Global said. “However, money supply for the sector witnessed some improvement with NBFCs continuing to diversify their borrowing sources toward banks, international and retail markets instead of the traditional capital markets, while securitisation market too is opening up.”