Tag: NBFC

RBI cautions non-bank lenders against growing reliance on algo credit models

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Reserve Bank of India (RBI) has cautioned non-bank finance companies (NBFCs) against becoming over-reliant on algorithm-based credit models, while also urging them to avoid overlending in certain segments.

Rule-based models can lead to inaccuracies in credit assessment, Deputy Governor Swaminathan J said in a speech released on the Reserve Bank of India’s website on Wednesday.

While many NBFCs are turning to such models to accelerate growth, they ”should not allow themselves to be blinded by these models”, said Swaminathan.

An over-reliance on past data, on which these credit models are built, can lead to mistakes in evolving market conditions, he said.

The deputy governor, speaking to a gathering of senior officials from among non-bank lenders, said they should avoid setting high-risk limits for certain segments like unsecured loans.

”There appears to be a fancy among most NBFCs to do more of the same thing, such as retail unsecured lending, top-up loans or capital market funding,” Swaminathan said.

”Over-reliance on such products may bring grief at some point in time later.”

NBFCs were also asked to diversify their sources of funding to counter any emerging liquidity risks.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Five Star Business Finance forecasts 30% loan growth for FY25

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Chennai-based Five-Star Business Finance, based in Chennai expects its loan book to grow 30% in the current financial year (FY25).

Total disbursements for January-March period grew 20% to ₹1,336 crore from ₹1,110 crore last year.

Lakshmipathy Deenadayalan, Chairman and Managing Director of the non-bank finance company (NBFC) said, “I don’t see any kind of weakness, both in loan growth as well as from collections perspective. The outlook is very strong; especially post COVID we have been giving growth of above 30% and the same growth will continue,” he added.

Deendalayan expects the net interest margins (NIMs) to come down to a steady state of around 15-16% in 2-3 years. The NIM was at 17.19% in the latest quarter versus 18.47% last year.

He pointed out that the NBFC focuses on lending to specific niche segments where traditional financial services are not readily available to customers.

Also Read | Five Star Business Finance forecasts 31-32% asset base growth in FY25

The lender has raised the Capital to Risk (Weighted) Assets Ratio (CRAR for certain users in light of the Reserve Bank of India’s (RBI’s) recent circulars.

CRAR is a measure used by banks to ensure they have enough capital to cover their risks

On loans given out for personal needs, the lender has raised the CRAR to 125% from 100%.

Also Read | RBI issues revised guidance note on operational risk management, extends it to NBFCs

In the January-March quarter, the lender’s profit after tax (PAT) increased by 40% to ₹236 crore.

The market capitalisation of Five Star Business Finance is around ₹21,651.48 crore. Its shares have gained close to 42% in the past year.

For the entire interview, watch the accompanying video

Catch all the latest updates from the stock market here

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

From bill payments to investment solutions — here’s what to expect from Aditya Birla’s ABCD fintech app

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Aditya Birla Capital, a non-banking financial company, launched a new fintech app, ABCD, on Tuesday, April 16. The company has also announced the launch of an omnichannel ABCD D2C platform to scale up its digital transformation journey.

With a vision to acquire 30 million customers within the next three years, KM Birla, Chairman of Aditya Birla Group, stressed the app’s role in leveraging India’s robust digital infrastructure.

Speaking at the launch event, Birla emphasised the nation’s strides in establishing a transformative digital ecosystem, evident in the growth of transactions via the Unified Payments Interface (UPI).

“ABCD is not just an app. It’s a testament to our commitment to meet all the financial needs of our customers seamlessly and engagingly,” said Birla.

The platform, developed in 12 months, is poised to revolutionise the financial services landscape by offering a diverse range of products and services tailored to meet individual preferences, the company said in a statement.

Vishakha Mulye, CEO of Aditya Birla Capital, highlighted the app’s role in augmenting digital services.

“We aspire to become one of the top three players in each segment of our core businesses,” said Mulye.

Backed by scalable infrastructure, user-friendly and intuitive interface, and robust functionalities, the platform will offer a simple and differentiated experience across all touch points including mobile app, website, branches, and virtual engagement channel, Aditya Birla Capital said.

Guided by a Maximum Viable Product approach, the ABCD D2C platform will offer a portfolio of 22 products and services, including facilities of a payment platform such as UPI, bill payment, and online recharges, with financial services like loans, insurance, and investments along with comprehensive personal finance tracking such as ‘My Track’, among others.

The platform will also feature ABCD’s own stack of products such as Portfolio Consolidator, Spend Analyzer, and Digital Health Assessment among others, and payment solutions.

The ABCD app will have features like multi-account payment, multi-mode receipt, and spend analysis tools, the NBFC stated.

This platform is housed under Aditya Birla Capital Digital Limited, a wholly-owned subsidiary of Aditya Birla Capital Limited.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

CRISIL upgrades U GRO Capital’s long-term rating to ‘A/Stable’

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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U GRO Capital, a datatech non-banking financial company (NBFC) specialising in MSME lending, has received an upgrade by CRISIL Ratings. The long-term rating on bank loans and non-convertible debentures has been upgraded to ‘CRISIL A/Stable’ from ‘CRISIL A-/Positive’, while affirming the short-term rating at ‘CRISIL A1’.

Since its inception, U GRO Capital has secured equity capital, totaling approximately ₹1,240 crore, the company said.

In a recent development, the company received an infusion of ₹340 crore in financial 2024 from the Danish Sustainable Development Goals Investment Fund and other key institutions.

As of December 31, 2023, U GRO Capital has witnessed surge in its assets under management (AUM), reaching ₹8,364 crore.

Notably, the company’s off-book portfolio constitute 45% of AUM.

Shachindra Nath, Founder and Managing Director of U GRO Capital said, “This upgrade supports our liability franchise and enable us to optimise borrowing costs and propels our growth journey.”

ALSO READ | Dividend Stock: This PSU, after a 295% surge, will pay ₹1.5 to shareholders, raise funds

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Invesco Mutual Fund prefers banks over NBFCs. Here’s why

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Invesco Mutual Fund currently prefers bank stocks more than non-banking financial companies (NBFCs) because of recent actions by the Reserve Bank of India.

Taher Badshah, Chief Investment Officer of Invesco Mutual Fund, explained in a CNBC-TV18 interview that banks have been affected less by these regulatory measures compared to NBFCs.

“Within the banks, there is an edge of private sector banks over public sector banks to some degree and not to say that we do not have a presence in public sector banks, but incrementally do we see more value, growth differential and valuation differentials now having levelled off between the two parts? We think so. And that is a view that we are going with, for 2024, as things stand now,” he said.

Other than banking and financial services and a select few NBFCs, the company identifies good value in the pharmaceutical sector, which is expected to experience a robust earnings recovery.

Also Read | Recent RBI actions will prompt banks and NBFCs to enhance compliance: Fitch Ratings

The firm is cautiously exploring parts of the consumer market that cater to lower-income groups. It also looks at specific areas within the commodities market that have not done well recently but show potential for stronger growth in the future. Overall, it’s being choosy in its approach.

“We all know that it is not a market where we have got value all over the place, but these are the pockets where we hunt a little more closely, we are likely to find some opportunities,” said Badshah.

The firm has significant investments in two-wheeler companies and suppliers of automotive parts.

For the entire interview, watch the accompanying video

Catch all the latest updates from the stock market here

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Tata Sons weighs options to meet RBI’s upper-tier NBFC regulations, listing unlikely in near future: Sources

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Tata Sons is considering various avenues to adhere to the Reserve Bank of India’s (RBI) mandates regarding upper-tier Non-Banking Financial Companies (NBFCs). Notably, as per RBI regulations, any upper-layer NBFC is mandated to list its shares within three years, with Tata Sons expected to adhere to this directive by September 2025.

However, sources told CNBC-TV18 that the conglomerate’s imminent listing appears increasingly improbable. Among the potential courses of action under consideration by Tata Sons, there is contemplation regarding the possibility of hiving off Tata Capital to ensure compliance.

Additionally, efforts to reduce group debt are being evaluated as part of the compliance strategy.

Despite the queries raised by CNBC-TV18, Tata Sons has not yet provided any official comment on the matter.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

RBI Action on IIFL, JM Financial: Experts see near-term overhang on NBFC stocks

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Shares of non-banking financial companies (NBFCs) are in focus in trade Wednesday following the Reserve Bank of India’s (RBI) recent crackdown on the NBFC space. The central bank has barred JM Financial Products Ltd from advancing loans against shares and debentures citing regulatory and governance lapses, following its recent crackdowns on Paytm Payments Bank Ltd and IIFL Finance Ltd.

The RBI action on JM Financial, follows action on IIFL Finance a day ago, said global broking firm Morgan Stanley in its note on NBFCs. The brokerage said that more instances of such actions could create an overhang on NBFC stocks in the near term.

Shares of Bajaj Finance were trading 1.18% lower, while Piramal Enterprises tumbled nearly 5% in today’s morning trade. Cholamandalam Investment, Shriram Finance, and L&T Finance shares also fell up to 8%. In comparison, the S&P BSE Sensex was down 0.18% at 73,541.25 at 10:48 am.

“We will have to differentiate some of these companies. I do agree that in the haste of making the business grow faster, some of these companies have probably compromised some levels of compliances. And that’s where the investor should be worried about. I would think that the larger companies which have got relatively stable infrastructure should not be into any kind of a problem,” said Deven Choksey, MD, DRChoksey Finserv.

On the contrary, Choksey feels that companies like Bajaj Finance would continue to grow at the rate of 30% plus because of the higher amount of focus on the retail consumers at the same time.

The RBI has asked JM Financial Products to cease and desist with immediate effect from any form of financing against shares and debentures. The central bank observed that the company repeatedly helped a group of its customers to bid for various IPO and NCD offerings by using loaned funds.

Besides other observations, the central bank also found serious governance issues on part of the company.

On March 4, the RBI had asked IIFL Finance to stop sanctioning or disbursing gold loans after observing certain material supervisory concerns in the company’s gold loan portfolio.

On Tuesday, the NBFC sought to assure investors that there were no governance or ethical lapses and that the company was taking “immediate and comprehensive steps” to address the central bank’s concerns.

On January 31, the RBI had imposed business restrictions on Paytm Payments Bank, including a ban on accepting fresh deposits and undertaking credit transactions after February 29. On February 16, the deadline was extended to March 15.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

CreditAccess Grameen crosses ₹25,000 crore AUM for the first time

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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In the 25th year of CreditAccess Grameen’s journey, the country’s largest Non-Banking Financial Company-Micro Finance Institution (NBFC-MFI) has crossed the landmark of ₹25,000 crore asset under management (AUM).

CreditAccess Grameen said in a regulatory filing the AUM growth was in line with the annual growth guidance of 24-25%, fuelled by robust customer additions.

Udaya Kumar Hebbar, Managing Director of CreditAccess Grameen, said, “The vast rural growth potential bodes well for our business as we continue to cover the length and breadth of the country to be the preferred financial partner to low-income households. We are positive about continuing our growth journey sustainably by leveraging the strength of being the lowest-cost lender in the microfinance industry.”

Ganesh Narayanan, Chief Executive Officer of CreditAccess Grameen, highlighted the organisation’s philosophy of evolving with customers, stating, “In line with our philosophy of evolving with customers, we have now scaled our retail finance book to over ₹600 crore.”

CreditAccess Grameen is an Indian microfinance institution headquartered in Bengaluru, focused on providing micro-loans to women customers predominantly in rural areas across India.

As of December 2023 end, the company is operating across 367 districts in 16 states (Andhra Pradesh, Bihar, Chhattisgarh, Goa, Gujarat, Jharkhand, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Odisha, Rajasthan, Tamil Nadu, Telangana, Uttar Pradesh & West Bengal) and one Union Territory (Puducherry) through 1,894 branches.

Within the NBFC sector, CreditAccess Grameen stock has a market cap rank of 17. It has a market cap of ₹23,398.08 crore.

For the December 2023 quarter, the company reported a 63.8% year-on-year (YoY) jump in net profit at ₹353.4 crore.

Net interest income (NII), which is the difference between the interest income a bank earns from its lending activities and the interest it pays to depositors, jumped 42.4%, coming at ₹1,292.2 crore against ₹907.7 crore in the corresponding quarter of FY24.

On Monday (February 26), the shares of CreditAccess Grameen opened 0.4% up at ₹1,477.15 on BSE.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

NBFCs should come out of their own shadows: RBI Deputy Governor

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Reserve Bank of India (RBI) Deputy Governor, M Rajeshwar Rao on Friday, February 9, said that Non-Banking Financial Companies (NBFCs) should step out of their own shadows and embrace a more responsible and transparent financial landscape.

While speaking at the NBFC Summit organised by the Confederation of Indian Industry (CII) in Mumbai, Deputy Governor Rao highlighted concerns about the misuse of freedom within the sector, especially cautioning against irresponsible practices among NBFC-MFIs (Microfinance Institutions).

Rao warned that the RBI would be “compelled to act” if such misuse continues.

Addressing the regulatory landscape, Rao pointed out that regulations for NBFCs, particularly those in the upper layer, need to be more calibrated.

He stressed that these regulations should not be on par with those applicable to traditional banks.

However, he underlined the importance of NBFCs broad-basing their funding sources and reducing over-dependence on bank credit to avoid concentration risks.

Deputy Governor Rao expressed concern about the tendency among NBFCs to employ oversimplified underwriting processes, particularly in the Peer-to-Peer (P2P) lending space.

He emphasised that instead of educating lenders about the inherent risks involved, some NBFC-P2Ps have been observed to underplay risks through various means, risking the stability of the sector.

On microfinance loans, Rao highlighted a shift from rule-based to principle-based frameworks. However, he voiced concerns about some microfinance institutions passing on increased costs to borrowers without reciprocating the benefits envisioned under the new framework.

Rao warned that the RBI is not oblivious to the sector’s misuse of freedom, promising regulatory action if irresponsible practices persist.

The Deputy Governor also drew attention to the concentrated business models of some NBFCs and the increased exposure towards technology-related risks.

He stressed the role of Self-Regulatory Organisations (SROs) in improving compliance culture within the sector.

ALSO READ | RBI Financial Stability Report: Banks fare well in stress test, NBFCs show some weakness

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

SoftBank-backed Juspay buys LotusPay, Namdev Finvest secures $15 million in Series B round

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Softbank-backed payments infrastructure startup Juspay has acquired LotusPay in an all-cash deal. This acquisition, says Juspay, will strengthen its offerings to the BFSI segment and merchants, with a particular focus on enhancing its recurring payment capabilities.

Founded in 2016 by Atma Krishna and backed by Y Combinator, LotusPay provides cloud-based software for merchants and banks and NACH debit, which enables financial institutions and merchants to collect recurring payments.

Juspay has recently received final approval from the Reserve Bank of India to function as a payments aggregator. Vimal Kumar, Founder and CEO of Juspay, explained that LotusPay’s strength in e-NACH, along with integrating it with UPI autopay and other options, will provide a comprehensive solution for subscriptions, benefiting many businesses by enabling seamless recurring payments.

Read Here | River EV to utilise $40 million Series B funding to scale distribution and service network

Namdev Finvest, an NBFC based in Jaipur, has raised $15 million in its Series B funding round. The funds come from various institutional investors, including British International Investment and LC Nueva AIF. Existing investor Incofin India Progress Fund also contributed to this round. The startup plans to utilise the fresh capital to expand its operations, diversify its products, and enhance its technology.

CNBC-TV18 spoke with Jitendra Tanwar, MD & CEO of Namdev Finvest, to delve deeper into their plans and strategies following this funding round.

Read Here | Equity investment startup Fabits secures pre-seed funding from WMUIndia

Sunil Wadhwani, an Indian-American entrepreneur, investor, and philanthropist, is in the spotlight. He is the co-founder of Mastech Inc. and IGATE and currently serves as the chairman of 2070 Health and W Health Ventures.

Wadhwani’s achievements in the field of artificial intelligence (AI) have earned him a place on the Time 100 AI list, recognising the 100 most influential people in AI. CNBC-TV18 engaged in a discussion with Sunil Wadhwani about accelerating the adoption of AI.

Watch the video for more

Also Read | AWS launches its first space tech accelerator programme in India, with T-Hub and Minfy

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow