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NBFCs amy grab larger share of corporate lending

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NBFCs amy grab larger share of corporate lending
The share for non-bank finance companies (NBFCs) in corporate lending might increase as the revised stressed asset framework predicts higher non-performing assets (NPAs) for banks.
“Pressure on asset quality could mean that banks would not be as aggressive about lending as before, because they would focus on resolving NPAs," said Karthik Srinivasan, Group Head, Financial Sector Ratings, Investment Information and Credit Rating Agency.
NBFCs have seen a strong growth rate in retail, but corporate lending is a new space for them. A CRISIL report said the share of wholesale credit in the NBFC credit pie was expected to increase to 19 per cent by 2020 from 12 per cent in 2014. It signals the shift of NBFCs towards corporate lending.
“While NBFCs would continue to do well in their traditional stronghold of retail finance, they are growing fastest in the wholesale finance segment," said the CRISIL report.Pricing pressure for NBFCs might decrease because banks would be less interested in lending for the short term, said analysts.
“Large corporates can’t move to NBFCs as there is more risk, and it requires consortium-based lending. The project sizes are quite big and the new NBFCs do not have the capabilities in terms of capital and risk," said Jinay Gala, analyst, India Ratings and Research.
The Business Standard, New Delhi, 21th February 2018

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