“Only when banks start to lend directly from their balance sheets will the scenario actually improve for NBFCs,” says Umesh G Revankar, managing director and CEO of Shriram Transport Finance Company (STFC). A leading financer of pre-owned trucks and cars, STFC borrowed through the bond markets (30 percent), bank loans (20.5 percent) and securitisation (20.2 percent) in FY19.
Data released in July this year show auto sales falling for the third successive month in June, by 12.34 percent, to 19,97,952 units. With auto makers struggling, lenders to the sector will also continue to see sluggish growth.
“We are enablers. If original equipment manufacturers’ volume growth is lower than previous years, then the enablers’ growth cannot be more [than theirs],” says Ramesh Iyer, managing director of Mahindra Finance, one of the leading lenders for passenger and commercial vehicles, and tractors. It expects the pace of growth for pre-owned vehicles and construction equipment to pick up on their balance sheet in coming years.
Raman Aggarwal, chairman of FIDC, the industry lobby for NBFCs, believes the scenario could improve over the next two quarters: “Credit offtake is weak, but if borrowings are weak so will be lending.”
First Published: Jul 16, 2019, 11:43
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