Financial Daily from THE HINDU group of publications
Saturday, Aug 30, 2003
Financial Daily from THE HINDU group of publications Saturday, Aug 30, 2003 |
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Money & Banking
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NBFCs Funding agencies bet on NBFCs M. Ramesh
Chennai , Aug. 29 THE `non banking finance companies seem to have caught the fancy of multilateral development funding agencies. This month alone there have been announcements from three NBFCs — Sundaram Finance, Cholamandalam Investment and Finance Company, and Shriram group — about their getting loan assistance from abroad. International Finance Corporation, Washington, has announced its intent to give long-term loans of $45 million to Sundaram Finance Ltd and $27.5 million to Cholamandalam Investment and Finance Company. Two other companies have said that they are on the verge of closing similar deals. Ashok Leyland Finance, is also in talks with foreign lenders and expects to make an announcement shortly. "We have been approached by a few funding agencies," said Mr N. Sampath Kumar, Executive Director (Finance), Ashok Leyland Finance, adding that the company was looking for a borrowing of $50 million. Sundaram Home Finance Ltd, which has equity participation from both IFC, Washington, and FMO, the Dutch development finance agency, expects to get a $15 million loan from ADB — negotiations are on. The Shriram group (Shriram Investments, Shriram Transport Finance and Shriram City Union Finance) will formally announce next week the deal with the Dutch financing company, FMO. The group will get a combination of equity and debt funds. Why this sudden rush to lend to NBFCs ? Says Mr M. Anandan, Managing Director, Cholamandalam Investments: "For the Western development finance companies, there are not many opportunities in India. Infrastructure is not happening, there is not such a great demand from the manufacturing sector. Their best options are, therefore, in financial intermediation." Mr Anandan points out that it is not only the NBFCs, but also the banks that are getting funding. IFC taking a stake in the Global Trust Bank and CDC in UTI Bank are two examples. The Managing Director of Sundaram Finance Ltd, Mr T.T. Srinivasa Raghavan, while agreeing that financial intermediation is a good window of opportunity for the lending agencies, also points out that from the Indian companies' point of view, the time is opportune for borrowing. The experts see the ripening of these deals as an indication of the appetite for funds, which in turn cues a pick-up in the economy.
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