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Mony K. Mathew

Thiruvananthapuram , Sept. 29

THOUGH the number of Reserve Bank-regulated non-banking finance companies (NBFCs) in Kerala has been on the rise over the years, the size of public deposits mobilised by them has remained negligible.

According to a recent study report of the working group on "non-banking financial institutions in Kerala", constituted by the State Planning Board, there were 23 public deposit-taking NBFCs as on December 31, 2002, in the State.

However, the size of their aggregate deposits at Rs 50.47 crore was insignificant as compared to the total NBFC deposits of Rs 18,822 crore in the country.

Similarly, the aggregate assets of NBFCs in the State, which stood at Rs 199.65 crore, was negligible when viewed against the total NBFC assets of Rs 9,833 crore in India.

The working group, chaired by Mr C.P. John, Member of the Planning Board, has found that even as public deposit mobilisation by NBFC has been subdued, there has been an increase in "exempted borrowings" by them as a means of raising resources.

The borrowings have been in the form of secured debentures, corporate deposits and bank finance.

The share of exempted borrowings in the resources of NBFCs rose from Rs 58.07 crore in 2000-01 to Rs 70.92 crore in the following year. The working group feels that the NBFC are relying increasingly on borrowed funds just to avoid the strict regulatory provisions regarding acceptance of public deposits.

While the total assets of the NBFCs in the State grew from Rs 141.76 crore in 2000 to Rs 199.65 crore in 2002, the share of hire purchase advances declined by seven per cent and constituted 62.7 per cent of the aggregate assets.

On the other hand, the share of loans and advances grew to 20 per cent from nine per cent during the period. The share of investments remained at seven per cent.

Another notable feature during the period was a shift from hire purchase advances to lending against gold. The work group has attributed this to low risk perceptions associated with gold loan.

The total amount of hire purchase and loans and advances as a percentage of outside liabilities (public deposits and borrowings) increased from 130.94 per cent in 2000 to 137.89 per cent in 2000, says the study and adds that only 17 per cent of the NBFCs have obtained credit ratings.

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