“NBFCs’ borrowing profile has changed significantly from capital market instruments to bank borrowings. Banks’ lending to NBFCs registered a growth of 34.7 per cent from September 2018 to January 2020,” Care Ratings said in a report.
Banks’ advances to NBFCs stood at Rs 7.37 lakh crore as of January 2020 compared to Rs 5.47 lakh crore in September 2018. The figures do not include funding made available to NBFCs by banks via securitisation route (direct assignment and pass through certificate), which amounted to Rs 1.70 lakh crore in 2018-19 alone.
The overall composition of NBFCs in bank credit improved from 5.5 per cent in July 2018 to 6.6 per cent in March 2019 and 7.4 per cent in January 2020, the report showed.
NBFCs’ borrowing from mutual funds, however, has seen a consistent decline for the last six quarters.
Their borrowing from MFs through commercial papers (CPs) and corporate debt stood at Rs 1.69 lakh crore as at end-January 2020 from Rs 2.25 lakh crore in September 2018, the report showed.
“MFs witnessed a fall in NBFC exposure due to liquidity concerns and reduction in sectoral exposure limit by SEBI in NBFC from 25 per cent to 20 per cent,” the rating agency said.
After the liquidity crisis triggered in the NBFC sector following default by IL&FS, MFs withdrew significant amount of their investments from this category.
The percentage share of funds deployed by mutual funds in CPs of NBFCs in January 2020 stood stable at 4.7 per cent of debt AUMs (lowest since July 2018), while the amount held was Rs 0.7 lakh crore.
Investments in corporate debt paper of NBFCs held steady at Rs 1 lakh crore in January 2020, and the percentage share declined to 6.2 per cent compared with 6.5 per cent in November 2019 and 7.7 per cent in July 2018.
The proportionate share of debt oriented scheme is 28.6 per cent of industry assets in January 2020, down from 29 per cent in January 2019 due to credit concerns, the report showed.