Enlarging the scope of its investigation, the finance ministry has asked some non-bank finance companies (NBFCs) for loans-related information on an urgent basis.
Some NBFCs have got letters asking them to give data on their loan exposure to real estate, construction and infrastructure sectors. Until now, the government was focusing on seeking information from banks.
In what is commonly being referred to as the bribe-for-loan scandal, officials of Punjab National Bank, Bank of India, Central Bank of India, Life Insurance Corporation of India and LIC Housing Finance were arrested by the Central Bureau of Investigation on allegations of taking money from officials of Money Matters Financial Services to facilitate loans for the finance company’s clients. Three officials of Money Matters were also arrested.
One chief executive of a finance company involved in giving loans to the infrastructure sector said finance ministry officials had been in discussions with them to get feedback on the nature of their loan book and get a feel of the situation on the ground. This was not a probe but an effort to be better prepared for analysis, he said.
Shares of leading finance companies fell this week on concerns about their loan exposures turning bad. Money Matters has fallen 45 per cent, while LIC Housing Finance hs fallen 28 percent and India Infoline 29 per cent since Monday. AK Capital declined 13.2 per cent, Indiabulls Securities 11.3 per cent, Geojit BNP Paribas Financial Services 10.4 per cent, Magma Fincorp 9.1 per cent and IL & FS Investment Managers 4.5 per cent.
Several finance companies help companies raise funds for projects by helping them sell bonds or get loans from banks.
