India’s third-largest bank by loan size Bank of Baroda has taken the lead to monitor the entire NBFC loan portfolio on behalf of all lenders, three people familiar with the development said.
It includes big names in the space such as Bajaj Finance, Tata Capital, HDB Financial Services, Tata Motors Finance, M&M Finance, KKR India, Indiabulls Commercial Credit in a group of 33 non-bank lenders having an exposure of ₹4 lakh crore to the banking system.
The certificate of registration is granted by the RBI. With surrendering the certificates, the companies cannot transact the business of a non-banking financial institution. In another statement, the central bank said it has cancelled the certificate of registration of 14 non-banking financial companies (NBFCs).
"Loans worth over Rs 6.45 lakh crore were sanctioned by PSBs during March 1 – May 15 for 54.96 lakh accounts from MSME, Retail, Agriculture & Corporate sectors; A notable increase compared to the Rs 5.95 lakh crore sanctioned as of May 8," Finance Minister Nirmala Sitharaman said in a tweet.
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Top non-banking finance companies are set to resume sanctioning fresh loans in June with sentiment boosted by the government stimulus and easing of the lockdown, even as they tread cautiously, aware that repayment capacities may have weakened with job losses and income declines.
Banks have sought that loans extended to overdue accounts be considered under the standard category, or classified as standard restructured asset, which would lead to lower provisioning.
Small entrepenuers who had earlier opted for a moratorium on repayments are now paying a portion of their dues as the cash flow begins to improve for them with businesses opening up slowly, said bankers. Even salaried credit card borrowers are opting to pay installements as they seek to use their cards more often which is not possible if they opt for a moratorium.
Private sector lender preps for life during COVID announcing the initiative on a pilot basis for savings account opening. May extend the service for other products in a phased manner.
An estimated 22,000-25,000 tonnes of gold are lying as assets with Indian households, according to the World Gold Council. Rural India accounts for 65% of this gold stock. About 1.2% of India’s total gold stock has been pledged as collateral for loans, leaving huge potential for the market to grow, consultancy firm Cognizant said in a note in January.
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The lockdown was first announced by Prime Minister Narendra Modi on March 24 for 21 days in a bid to combat the COVID-19 pandemic. It was first extended till May 3 and again till May 17. In March, RBI had allowed a three-month moratorium on payment of all term loans due between March 1, 2020 and May 31, 2020.