By Mitali Salian and Vinayak Aggarwal
Tata Capital expects a growth rate of 20% this financial year, even as growth rate for the sector has fallen, mirroring a slowdown in the basic economy, managing director and CEO Rajiv Sabharwal tells Mitali Salian and Vinayak Aggarwal. Edited excerpts…
Could you tell us about your cost of funds?
Post the IL&FS crises, over the third and fourth quarters of the previous fiscal year, incremental borrowing costs went up by about 30-50 basis points. Subsequently, RBI measures, along with rate cuts and the change of sentiment, as also investors making a proper credit differentiations, we have seen a correction of 25-30bps.
The pricing which you offer is a function of the rating of the company, the capital adequacy and the parentage of the company. It also depends on the nature of assets. If you notice G-Sec rates, CP rates have come down. We are seeing banks passing on some of the cuts. So, bank rates are coming down. And similarly, ECB rates are also very attractive.
How severe is the risk of NBFCs bogged down by elevated cost of funds losing market share to banks?
In the last few years, the proportion of NBFC loans increased. Currently, some shift in market share is happening towards banks. Growth rates have slowed down for the sector. But more importantly, the basic economy has also slowed down. It cannot happen that sales are down in the primary industry and financing sales go up. So, there is some moderation in growth rate which will happen for everyone.
What opportunities for growth do you see in the current environment?
We are seeing moderation in growth rate, which are clear from the GDP numbers. The good part is the government, the regulator, everybody has taken note of this fact. And my personal belief is we should see some of these cycles changing in the next 6 to 9 months because steps have been taken. As for NBFCs, we still expect to grow at 20%+ because we believe there is an opportunity to grow. So, I would say that if the economy grows at somewhere close to 7%, you will see credit growing at 15-17% overall.
Any real impact you see of the RBI measures for NBFCs on rate of funds and overall availability of funds to the sector?
Both the measures taken by the RBI will have a positive impact, it will increase more liquidity for those companies which operate in the mentioned priority sectors. If somebody is a corporate lender, it will not help them. Financiers to housing loans, agriculture and MSMEs will improve the liquidity for those and will bring down the interest rates for them because for priority sectors, banks are keen to lend at minimal rates.
There is some issue around likely delinquency in the retail advances. Do you see it as being a concern?
No, see, we have to watch it all times in all the segments and take proactive steps whenever there is a need to do it.
