Following the footsteps of India’s largest public sector bank the State Bank of India (SBI), more Public Sector Banks (PSBs) are likely to purchase portfolios from Non-Banking Financial Companies (NBFCs), said senior government officials on October 11.
“Many banks are looking at taking up assets of NBFCs,” said a top government official.
He added that the banks believe that there is “opportunity” in taking these “secured assets”.
State Bank of India on October 10 said that it is planning to go for additional portfolio purchases in the range of Rs 20,000 – Rs 30,000 crore.
“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,” said SBI in its official communique.
Portfolio purchase from NBFCs is a mandatory part of the regulatory requirement to be followed by the banks for priority sector lending. NBFCs, on the other hand, find it easy to deal with banks as their buyers for such sell-offs.
In FY18, while loan books of NBFCs grew 21.2 percent, bank loans grew 10.3 percent.
According to a Credit Suisse note, NBFCs are going to get 41 percent of borrowings matured in the next six months.
Centre, however, considers that these investments from banks will help to curb the menace of an impending liquidity crunch in the sector that emerged after Alarm bells rang after Infrastructure Leasing and Financial Services (IL&FS) default fiasco.