The State Bank of India’s (SBI) decision to buy good-quality assets from non-banking finance companies (NBFCs) could prove to be beneficial to the sector, believes Umesh Revankar, MD of Shriram Transport Finance. NBFC companies have been facing a liquidity crunch following debt repayment defaults by IL&FS and its subsidiaries.
Bankers are worried since the loans they give NBFCs are secured loans, raising the question of legality if the latter sells it portfolio to other players.
“We are playing only a complementary role to banks. There is no competition. We do not encroach into the space where banks do their lending,” Revankar said. He added that the third and fourth quarters of the current financial year will see loan growth between 45 -55 percent owing to greater spending in the festive season.
Revankar underplayed the possibility of borrower default in the commercial space, saying that asset quality was good in the harvest season.
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