The non-banking finance companies sector (NBFC), which is witnessing a crisis of confidence with some players defaulting on repayment, has raised a whopping ₹2.36 lakh crore in the last 12 months by selling loans.
NBFCs and housing finance companies (HFCs) were forced to sell loans to mobilise resources as banks had almost stopped lending to the sector.
“Given the squeeze in liquidity since September 2018, NBFCs and HFCs together have raised the much-needed funding to the tune of ₹2.36 lakh crore over the last 12-month period (i.e. October 2018 to September 2019) through sell down of their loan assets under either the securitisation or direct assignment route,” rating agency ICRA said.
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The agency said the unprecedented increase in sell-down volumes reflects the choking of traditional on-balance sheet borrowing channels such as loans, bonds and commercial paper issuances. “NBFCs and HFCs continue to rely heavily on securitisation as a tool for raising funds, manage liquidity and to correct any asset-liability mismatch,” said Abhishek Dafria, head, structured finance ratings, ICRA. He added the Centre’s partial credit guarantee scheme (PCG) will add to overall market volumes. “With public sector banks directed to disburse funding of ₹1 lakh crore under the PCG scheme by February 2020, we believe that the size of the securitisation market would be at an all-time high, in excess of ₹2 lakh crore for FY2020,” he added.