Press Esc to close
Sunday 22 January 2017
News updated at 9:38 PM IST
Weather
Max: 28.9°C
Min : 15.3°C
In Bengaluru
Sunny day

Tata Capital says new norms to eat into bottom lines of NBFCs

Mumbai, Jan 13 , 2013 (PTI)
Tata Group's finance subsidiary Tata Capital has expressed reservations about the Reserve Bank's proposed changes in the norms governing NBFCs, saying the move will negatively impact profits and raise lending rates.

"Overall, in the short-run it will impact NBFCs' profitability and our ability to lend," Tata Capital Chief Financial Officer Govind Sankaranarayanan told PTI. He, however, added that the new norms are good in the long-term.

The draft norms, based on the recommendations by the Usha Thorat (Former RBI deputy governor) committee and released last month, seek to bring NBFCs at par with commercial banks.

Stating that banks operate with benefits like recovering money under the Sarfesi Act and having access to low-cost deposits, he said, "Only on the disadvantages side you are going to bring it (banks and NBFCs) at par, and thus it becomes difficult."

"Conceptually, one cannot object to the idea of an NBFC and a bank being similar. But the playing field needs to be uniformly levelled," Sankaranarayanan said.

Among other recommendations, the RBI wants to cut the time period for classification of an NBFC's account into an NPA in 90 days from the present 180 days, higher capital adequacy and also a phased jump in the provisioning for standard assets to 0.40 per cent from the present 0.25 per cent.

"All these increase your cost, so if your cost jumps, you will have to pass them over to your customers... to some extent, lending costs will go up by a bit and to some extent you will not lend to some people," the Tata Capital official pointed out.

He further stated that the weaker than the best rated borrowers residing in small towns, availing money for commercial vehicles and farm equipments and small businesses -- traditional businesses for NBFCs -- will suffer in this case.

Sankaranarayanan said even after the gloomy news on the economic front, Tata Capital will meet its targeted credit growth of up to 30 per cent this fiscal as the company is on an expansion mode.

 

Go to Top

Photo Gallery
Olympic finalist Gymnast Dipa Karmakar being felicitated with Assames japi,Khoria and gomacha...

Olympic finalist Gymnast Dipa Karmakar being felicitated with Assames japi,Khoria and gomacha...

A boat man carries Hindu devotees in the river Yamuna early in the morning during magh Mela in...

A boat man carries Hindu devotees in the river Yamuna early in the morning during magh Mela in...

Austria's Michael Matt speeds down the course during an alpine ski, men's World Cup slalom...

Austria's Michael Matt speeds down the course during an alpine ski, men's World Cup slalom...

Punjab tableaux artists pose a photo during a press preview in New Delhi on Sunday...

Punjab tableaux artists pose a photo during a press preview in New Delhi on Sunday...

AIADMK leader SP Velumani inaugurates Cattle race after the urgent law was passed for...

AIADMK leader SP Velumani inaugurates Cattle race after the urgent law was passed for...

Bollywood actors Madhuri Dixit and Manish Paul atteded the Umang Mumbai Police Show 2017 in...

Bollywood actors Madhuri Dixit and Manish Paul atteded the Umang Mumbai Police Show 2017 in...

Youngstres and Students during the protest to Lift ban on jallikattu and impose ban on PETA...

Youngstres and Students during the protest to Lift ban on jallikattu and impose ban on PETA...

India Captain Virat Kohli celebrate after his 50 runs during 3rd ODI against England at Eden...

India Captain Virat Kohli celebrate after his 50 runs during 3rd ODI against England at Eden...

Rescue and relief work in progress at the site where Jagdalpur-Bhubaneswar Express train derailed...

Rescue and relief work in progress at the site where Jagdalpur-Bhubaneswar Express train derailed...

Samajwadi Party Vice president Kiranmoy Nanda, SP state president Naresh Utam and Congress state...

Samajwadi Party Vice president Kiranmoy Nanda, SP state president Naresh Utam and Congress state...

Like us on Facebook

Copyright 2014, The Printers (Mysore) Private Ltd., 75, M.G Road, Post Box 5331, Bengaluru - 560001
Tel: +91 (80) 25880000 Fax No. +91 (80) 25880523