The corporate sector is slowly returning to fund non-banking finance companies (NBFCs) as operations are getting stabilised and the fear of worst is receding for the battered sector.
According to market dealers, HDFC Bank's consumer finance NBFC - HDB Financial - recently saw interest from big corporate like L&T, Wipro, HCL Technologies and others. "The corporate are willing to park short term funds of 1 to 2 years in NBFCs as the rates are attractive at 7 per cent plus. We have received many enquiries from corporate houses," says a dealer.
The well-run NBFCs in the market are the ones able to attract funds from the corporate sector via debentures. The debenture route was muted since the collapse of IL&FS and Dewan Housing Finance. There was a time when these lenders had lot of apprehensions because of the mismatches of asset and liabilities in the NBFCs book.
As per RBI data, the outstanding borrowing through debenture route actually fell from Rs 9.19 lakh crore in March 2019 to Rs 9.15 lakh crore in September 2020. The short-term borrowing through commercial paper (CP) for less than a year also crashed from Rs 1.59 lakh crore to Rs 89,065 crore in the same period. The banks were the big lenders to NBFCs in the difficult times.
NBFCs' total borrowings from the market is quite large at Rs 23.52 lakh crore for September 2020.
While COVID-19 pandemic had put further brakes on corporate lending to NBFCs in 2020, dealers say things are improving and corporate sector is willing to park their surplus funds for a period of less than 3 years.