Banks place bids worth Rs 2,775 crore to on-lend to funds, NBFCs.
The Reserve Bank of India’s (RBI) special window for banks to on-lend to mutual fund houses and the non-banking finance companies (NBFCs) has recieved a lukewarm respone from lenders.
Banks have largely kept away from RBI’s special, fixed-rate, term repo under the 14-day Liquidity Adjustment Facility (LAF), if bids received in the last two days are any indication.
Since Monday, the day the central bank’s special window was opened, bids worth Rs 2,775 crore were placed at the auctions against the total outstanding amount of Rs 60,000 crore at the fixed rate of 7.5 per cent.
“It’s the commercial decision of banks to lend money to NBFCs. It implies that banks are still cautious to lend to NBFCs and they might take some more time to start lending normally to us,” said an NBFC chief.
On the other hand, bankers said it was a lack of interest on the part of mutual funds and NBFCs as they were yet to approach them for money.
“Banks are not being approached by NBFCs at all and, as far as MFs are concerned, we have feedback that they are seeing inflows in terms of new subscriptions,” said a treasury head of a mid-size public sector bank.
Last Saturday, RBI had announced that it would conduct the special, fixed-rate term repo under LAF everyday until further notice up to a cumulative amount of Rs 60,000 crore to the extent of up to 1.5 per cent of the banks’ net demand and time liabilities (NDTL) for enabling them to meet the fund requirements of MFs and NBFCs.
However, some NBFCs feel that banks are now preoccupied with cutting interest rates and it is only a matter of time that will start normal lending to the big entities.
“The liquidity condition is showing signs of improvement. It is only a couple of days that the window has been operational and I believe that in the course of time, banks will definitely start lending to NBFCs, which are well capitalised and have a proven track record,” said Shriram Transport Finance Company Managing Director R Sridhar.
On Tuesday, RBI received four bids worth Rs 1,465 crore against eligible securities worth Rs 52,240 crore. On Monday too, banks placed four bids worth Rs 1,310 crore at the auction against securities worth Rs 7,760 crore.
