With a continued turmoil in the financial sector, loans disbursements by Non-Banking Finance companies (NBFCs) in the first quarter of this fiscal year has fallen by a sharp 30 per cent.
The data compiled by FIDC and CRIF revealed that the disbursements by NBFCs in the quarter ended June 30, 2019, amounted to Rs 1.79 lakh crore, as against Rs 2.57 lakh crore disbursed in the same period a year ago. This is a decline of 30.3 per cent.
The disbursements by NBFCs across most segments registered a decline in the first quarter of the fiscal, barring a few sectors like personal and consumer loans, gold loans and bank guarantees, that saw continued growth.
“NBFCs continued to feel the liquidity crunch during Q1 of the current fiscal, primarily due to banks getting risk averse when it came to lending to NBFCs. Some remedial measures have been announced since July by the government and the Reserve Bank of India, but the key point is that all the measures to infuse liquidity are routed through banks…it is most important to develop funding sources outside the banking system,” said Mahesh Thakkar, Director General, FIDC. He also attributed the increase in gold loans to borrowers trying to meet their liabilities such as children education, medical expenses and house repairs.
Disbursements of consumer loans grew by 12 per cent to Rs 16,322.18 crore, while gold loans grew by 22.19 per cent to Rs 8,374.99 crore in this quarter. Similarly, disbursements of personal loans by NBFCs grew by 21.9 per cent to Rs 16,257.65.
Despite the flux in auto industry, disbursements for two-wheelers and used car loans also registered positive growth at 9.04 per cent and 29.29 per cent respectively. However, reflecting the slowdown in sales, disbursements of loans of retail auto loans fell by 8.28 per cent to Rs 16,774.86 crore, and commercial vehicle loans by 38.38 per cent to Rs 11,922.32 crore in the quarter under review.
According to FIDC-CRIF data, loan sanctions by NBFCs in the fourth quarter of 2018-19 dropped had fallen by a similar 30.79 per cent to Rs 1.96 lakh crore, as against Rs 2.83 lakh crore in the same period a year ago.
NBFCs have been finding it difficult to raise funds for nearly a year now since the defaults by Infrastructure Leasing and Financial Services and later by Dewan Home Finance Corporation Ltd. With banks becoming cautious of lending to the sector, these companies have been facing a liquidity squeeze or availability of funds at a higher cost.