Co-lending deals now come under taxman's lens
In the past one month, the department has sent multiple queries to more than a dozen banks and is likely to follow up with questions to NBFCs on the co-lending facility, they said.
In the past one month, the department has sent multiple queries to more than a dozen banks and is likely to follow up with questions to NBFCs on the co-lending facility, they said.
The Reserve Bank of India (RBI) has announced that government-owned non-banking financial companies (NBFCs) will be subject to the strict supervisory norms of the Prompt Corrective Action (PCA) Framework starting from October 2024. This framework includes restrictions on dividend distribution and profit remittance, requirements for equity infusion by promoters/shareholders, leverage reduction, and limitations on issuing guarantees or taking on contingent liabilities for group companies.
The Reserve Bank of India has released a list of fifteen NBFCs that fall under the "upper layer" in the scale-based regulation for the financial year 2024. LIC Housing Finance Limited, Bajaj Finance Limited, and Shriram Finance Limited are among the top-ranking companies on the list.
As per the data for large NBFCs ( assets under management or UM of Rs 10.3 lakh crore as of March 2023), the AUM grew 19% yoy in FY23, compared to 3.3% and 9.6% in FY21 and FY22, respectively. "The revival in pent-up demand, which was dormant during the pandemic, led to the robust growth in the portfolio of NBFCs, despite the headwind of higher interest rates" India Ratings said in a report.
ICRA has reconsidered its assessment for non-bank finance companies (NBFCs), forecasting growth in the unsecured retail loans market. The agency anticipates growth of between 18% to 20%, up from its previous estimation of between 12% to 14%, with the rise driven by increased demand for loans such as personal and consumption credits, microfinance loans and small enterprise loans.
Almost 92% of FPIs inflow between June 1 and 15 went into just three sectors: financial services, capital goods, and auto, which have been favourites of overseas fund managers since the beginning of the year.
The ARC lobby group has been asking the authorities to relax these norms for small-ticket loans. The process may be followed only in case of high-value corporate loans beyond a threshold.
The RBI, also the banking sector regulator, is closely monitoring profitability and other financial performance measures of these conglomerates and their companies besides parameters such as the quantum of debt raised from other sources like external commercial borrowings or bonds for any signs of stress.
With banks witnessing a multi-year high credit demand and chasing deposits, the lending cost for non-bank lenders with 3-5 year corporate bonds yields have risen 120-160 basis points since March.
These banks have written to the Reserve Bank of India to permit them to operate with bigger banks and NBFCs, as they have the products and reach but are at a disadvantage when it comes to resources, two people familiar with the matter said.
The RBI doesn’t have a problem with 90-second credit. The regulator was even willing to let nonbank finance companies, or NBFCs, retain their existing lead over banks in the origination of short-term consumer credit, especially for really small-ticket transactions.