NBFCs’ reliance on external borrowings up at 90.4%: RBI

Our Banking Bureau

Mumbai, Aug 21: AN increasing dependence on external borrowings has been witnessed in the case of non-government financial and investment companies, says the Reserve Bank of India (RBI) in its August bulletin. The share of external sources of funds as a percentage of total funds increased to 90.4 per cent in 1999-2000, up from 87.6 per cent in 1998-99, and this is essentially due to the increase in their borrowing programmes. Total borrowings increased to Rs 2,720 crore in 1999-2000 from Rs 1,775 crore in 1998-99.

The RBI, while sketching this trend based its study on the audited annual accounts of 803 companies, which closed their accounts during the period April 1999 to March 2000. These companies raised funds to the tune of Rs 4,008 crore from various sources in 1999-2000 as against Rs 3,137 crore raised in the preceding fiscal.

However, no distinctive change has been observed in their asset structure. Receivables, investments and fixed assets constituted a major part of the total assets during 1999-2000, the pattern remained almost similar in the previous period.

Receivables during 1999-2000 stood at 47.8 per cent (49.8 per cent) while investments stood at 28.3 per cent (28.2 per cent) with net fixed asset at 10.7 per cent (12.9 per cent).

The asset structure of these companies was in tune with the major activity undertaken by them. The study, on the other hand, pointed out a direct influence on the deployment of funds by major activities undertaken by these companies. Investments as a deployment of funds stood at 29.4 per cent (30.8 per cent) while receivables was at 28.7 per cent (48.7 per cent) and inventories at 39.3 per cent (19.6 per cent).

Growth has been seen in the profit for these companies. Profit margin and return on equity for 1999-2000 were 12.9 per cent and 3.1 per cent respectively. Dividend rate also increased to 6.2 per cent (3.6 per cent). The main income grew by 16.6 per cent.