, India

Bank lending to Indian NBFCs virtually nil

RBI regulatory tightening blamed for slowdown.

Indian banks' lending to non-banking finance companies or NBFCs has virtually ground to a halt due to the combined impact of regulatory tightening by the Reserve Bank of India, the central bank, and poor business.

Growth in bank lending to NBFCs dropped to 1.9% in the 12 months ended June 2013 compared with 44% in the same period last year, said RBI.

The plunge in bank lending is more evident in the three months ended June, when banks lent just US$3.27 million to NBFCs or a growth of 0.8% against a 11.4% growth in the year-ago period.

Banks have turned risk-averse to NBFCs after RBI tightened rules for these companies to curtail their rapid growth.

RBI’s removal in 2011 of NBFC’s priority sector tag for bank loans substantially raised the cost of funds for NBFCs.

 


 

Join Asian Banking & Finance community
Since you're here...

...there are many ways you can work with us to advertise your company and connect to your customers. Our team can help you dight and create an advertising campaign, in print and digital, on this website and in print magazine.

We can also organize a real life or digital event for you and find thought leader speakers as well as industry leaders, who could be your potential partners, to join the event. We also run some awards programmes which give you an opportunity to be recognized for your achievements during the year and you can join this as a participant or a sponsor.

Let us help you drive your business forward with a good partnership!