IDFC, the Mumbai-based non-banking finance company (NBFC), is expected to benefit, as the Budget has allowed banks to raise long-term funds for lending to the infrastructure sector with minimum regulatory requirement.
"On the liability side, banks will be permitted to raise long-term funds for lending to the infrastructure sector with minimum regulatory pre-emption such as CRR, SLR and priority sector lending," said Finance Minister Arun Jaitley in his Budget speech.
The NBFC got a new banking licence early this year is in transition. It will be converting into a bank soon. This will require the existing loan book of the NBFC to be transferred to the new bank.
"There is a scope for interpreting the existing assets being transferred to the new bank as fresh loan," said a consultant working with the management consulting division of a top accounting firm.
"We are awaiting an RBI (Reserve Bank of India) notification in this regard," said a source at the lender. A company spokesperson declined to comment on the issue.
According to the company's annual report, it had a loan book of nearly Rs 60,000 crore. Nearly half of the amount has been lent to infrastructure projects.
Currently, banks have to maintain statutory liquidity ratio at 23 per cent, cash reserve ratio at four per cent and priority sector lending at 40 per cent. This was considered a major hurdle for the NBFC, as it would have affected its profitability. "Now, IDFC's return on equity and return on capital is expected to benefit by 200 to 300 basis points," said an analyst with a domestic brokerage who did not wish to be identified. The lender had return on equity and return on capital at 14.2 per cent and 11.4 per cent, respectively in the past financial. IDFC's stock is up 6.67 per cent to Rs 148.35 a share in the past two trading sessions on the BSE.