After having suffered a slump and a slowdown there are signs of revival in the NBFC segment. The recent quarterly results of a few NBFCs have shown positive trends as their overall loan disbursement and overall business has improved.
The growth of many of them has been driven by higher than expected investment banking revenues and interest income. There was also an improvement for NBFCs in the vehicle financing space as collection efficiency continued to show improvement. Overall loan defaults also reduced drastically. For some of the gold NBFCs, it was a return to healthy growth as many gold loans were being preferred. Many NBFCs are also aiming at aggressively targeting their customers by new schemes and offers.
Bajaj Finance Limited, the lending and investment arm of Bajaj Finserv is offering interest rates of up to 7.35 per cent on its Fixed Deposits. This NBFC is offering investors attractive interest rates along with safety and assured returns. The company claims to have more than 2,50,000 customers who have contributed to a deposit book of more than Rs 20,000 crores. On the other hand, Delhi-based NBFC, SATYA MicroCapital Limited has announced that it has started the process of loan disbursements under the PM SVANidhi Scheme. The company has also launched a series of customer as well as employee oriented pilot initiatives.
This NBFC is also educating its clients about financial inclusion, digital banking, saving options, and government schemes and is aggressively aiming at imbibing a fresh dimension in the Indian microlending space. The company has expanded its operational network across 22 states, through a channel of 180 plus branches.
As per a report by Motilal Oswal NBFC such as ICICI Securities, Profit After Tax (PAT) grew by almost 44 per cent QoQ (Quarter on Quarter) and was driven primarily by higher than expected investment banking revenue and interest income. Similarly as per the report Cholamandalam Finance reported strong results with 40 per cent PAT growth YoY. The management of this company has indicated that collection efficiency would rise to 105 per cent in October 2020 from 87 per cent levels seen in September 2020. Similarly for Shriram Transport, collections in Sep 2020 were 95 per cent of the demand. As per the Motilal report in the vehicle financing during the moratorium period, only 5 per cent of customers did not pay even a single instalment. Some of these customers subsequently paid over the Sep to Oct 2020 time frame.
Gold loans NBFCs are also doing well in the NBFC segment. “Unlike other asset classes, gold loans have not faced major issues in collection and disbursement, or re-pledge of loans, barring the stringent lockdown phase in April and May. Preliminary estimates indicate that gold loan disbursements, including re-pledge, at NBFCs have more than doubled sequentially in the second quarter of this fiscal,” observed Krishnan Sitaraman, Senior Director, CRISIL Ratings.
“Education loans are increasing for job assured programs. Most of these are collateral free as they are job guaranteed. Loans are also being disbursed against assets including land and real estate. Most NBFC's are also seeing growth in rural product loans. Specially agricultural products and primary services. Loans to drive mobility such as 2 wheeler loans have gone up substantially,” adds Robin Bhowmik, Chief Business Officer of the Manipal Global Academy of BFSI.