SBI to purchase loan assets worth up to Rs 45,000 crore from NBFCs
MUMBAI: State Bank of IndiaNSE 6.24 % will increase its portfolio purchase of loans from non-banking finance companies (NBFCs) this year as it looks to provide the much needed liquidity to the fundsstarved sector, and simultaneously fulfil its priority-sector obligations.
“The bank is looking for opportunities both in priority and non-priority sectors. The bank had initially planned for a growth of Rs 15,000 crore through portfolio purchase during the current year, which is now being enhanced,” the country’s biggest lender said in a statement late Tuesday.
“As per the bank’s internal assessment, there may be an opportunity to buy an additional portfolio in the range of Rs 20,000 to Rs 30,000 crore,” the bank said.
Chief financial officer (CFO) Prashant Kumar said the loans would largely be in the priority sector.
“This will help us meet our priority-sector target and will also benefit some NBFCs that are looking for funds. With 66 per cent credit/ deposit ratio, we have sufficient liquidity and capital; so this is a good opportunity for us,” Kumar said.
Central bank rules mandate banks to lend 40 per cent of their deposits to small businesses, agriculture and home loans under a certain threshold. SBI plans to buy these loans from NBFCs active in this space.
NBFCs are facing liquidity pressures after infrastructure financier IL&FS defaulted on multiple payments since late August. Defaults by a systemically important NBFC have made investors wary about the sector, raising their cost of funds and making access to liquidity difficult. In September, DSP Mutual fund sold some commercial papers of home loan financier Dewan Housing FinanceNSE 1.51 % (DHFL), leading to a sharp fall in the stocks of NBFCs.
NBFCs that are also holding companies for small finance banks have been hit as investors have made no exceptions in the sector. For instance, Ujjivan Financial Services, the non-financial holding company of Ujjivan Small Finance Bank, has fallen to Rs 233 per share from a peak of Rs 399 per share in August.
“Ujjivan is… just a holding company for Ujjivan Small Finance Bank. We are not into the lending business. Despite this, the market has taken it as one among NBFCs and sold the stock,” said Ittira Davis, CEO at Ujjivan Financial Services.
“This is a panic reaction because even our operating company is not an NBFC but a bank with its own funding model. Ideally, the market should distinguish between a short-term lender like ours and a long-term lender like IL&FS.”
NBFCs expect the RBI to announce a special window to help them access funds. On Monday, the National Housing Bank (NHB) increased the amount of refinancing housing finance companies could take from the regulator to Rs 30,000 crore from Rs 24,000 crore.
“We continue to lend to NBFCs and housing finance companies in line with our total exposure to them. Some exposures are increasing,” Bank of Baroda Managing Director PS Jayakumar said, adding that he expects normalcy to be restored in due course.
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