MUMBAI: In a move that will provide liquidity to non-banking
finance companies (NBFCs),
SBI has said that it will buy loans worth up to Rs 45,000 crore this year. The announcement comes at a time when liquidity is drying up for such finance companies in the wake of the IL&FS crisis and tightening of norms by the RBI. Speaking to TOI, SBI chairman Rajnish Kumar said that the bank has decided to increase its purchase target from Rs 15,000 crore as it is sensing a business opportunity to grow its loan book. While SBI is looking for opportunities both in priority and non-priority sectors, the focus is on the former.
“SBI today stepped up substantially a facility for purchasing a portfolio of assets from NBFCs to provide liquidity to them. This measure should alleviate liquidity concerns to a great extent,” economic affairs secretary Subhash Chandra Garg said.
Kumar, however, denied that the move was a bailout or there was any direction from the government or the RBI to provide liquidity support. “This is governed by our own considerations,” he said. The bank is unlikely to purchase loans from IL&FS, which is expected to go for outright sale of assets. Besides, most of the IL&FS loans are not in the priority sector.
In its
monetary policy, the RBI had said that it will be cracking down on NBFCs that use short-term finances to create long-term assets. RBI deputy governor N S Vishwanathan said that while asset-liability norms were always there, the central bank will now be tightening these guidelines.
According to Kumar, SBI would focus on loans to housing and small & medium enterprises. “This will be under securitisation. We will be purchasing a portfolio of loans and the originators will continue to service the loan for which they will receive a fee,” he said.
There will also be some sharing of default risks “The risk-sharing will be in the range of 10:90 or 20:80 with the originators sharing the smaller portion. The idea is that they should continue to have some skin in the game,” said Kumar.
The
commercial paper markets, through which finance companies have been raising three-month money, has suddenly dried up after an IL&FS group company defaulted. Fearing defaults, mutual funds — who were big buyers of NBFC debt — have also begun to shun their paper, and stocks of many finance companies have crashed in recent days.