Even as the sentiment for PSU bank stocks got a big boost after the Narendra Modi-led government announced a mega recapitalisation plan worth Rs 2.11 lakh crore in October, Tushar Pradhan of HSBC Global Asset Management says that the move will not hurt NBFCs. In an interview to ET Now, Tushar Pradhan, the CIO of HSBC Global Asset Management said, “ The NBFCs will not be under pressure. You have to understand that the growth in the NBFC sector has not come at the cost of the banking sector. The market has been expanded.” The market expert observed that there is still a very vibrant market for NBFCs. “Just because the public sector banks have returned to some sort of health does not mean that someone who is being borrowing from the NBFCs now will go to a public sector bank,” he told the channel.
In the same interview, he pointed out that banks have more stringent rules while lending as compared to NBFCs. “If you have to apply for a loan or a working capital aligned with the bank, there are a lot of requirements that most of these banks need to be able to assess for credit as opposed to the small size credit that the NBFCs have started lending with half or may be even less than the kind of requirement that the banks could expect,” the market expert observed.
Will the current market rally sustain? “There are enough indications from an infrastructure perspective and from a government spending perspective that all of those impetuses are likely to sustain. If interest cost continues to remain low, if commodity prices continue to remain benign and overall if growth in the western markets especially the developed markets continues, there is adequate chance for us to believe that 2018 will also be a strong year,” Tushar Pradhan told in the same conversation.