Bank of Baroda wants to buy Rs 6,000 crore of securitised NBFC loans in Q2

The bank is in discussions will NBFCs/HFCs such as PNB Housing Finance, Indiabulls Consumer Finance, IIFFL, Annapoorna MFI among others for loans

Second largest state-run lender Bank of Baroda is looking to buy out assets worth around Rs 6,000 crore from the fund-starved non-banking finance companies this quarter, a senior bank official said Monday.

The lender had already bought around Rs 3,500 crore loans from NBFCs in the June quarter, while for the year March 2019, it had purchased assets worth around Rs 10,000 crore from NBFCs/housing finance companies.

"We are expecting to do around Rs 6,000 crore (asset purchases under direct assignment) this quarter," executive director Papia Sengupta told reporters here.

The bank is in discussions will NBFCs/HFCs such as PNB Housing Finance, Indiabulls Consumer Finance, IIFFL, Annapoorna MFI among others for this, an official said.

Sengupta said some of the assets would be bought under the partial guarantee scheme for which lender will obtain permission from the government.

In the budget, the government had said it would provide a one-time six months' partial credit guarantee to public sector banks for the first loss of up to 10 percent on their purchases of high-rated pooled NBFC assets, amounting to Rs 1 trillion.

The lender is also targeting to disburse Rs 1,000 crore under the Reserve Bank's recently introduced co- origination model between banks and non-banking financial companies, this quarter and has already lent Rs 50 crore to Srei Finance and Edelweiss Financial.

The bank is also in talks with 10 more NBFCs and micro-finance companies, including Cholamandalam, Indiabulls Housing, Adani Capital, IIFL Finance, Hero Housing, and Centrum Housing, among others for this.

"While we have already started co-origination of loans, it will take around two to three months to reach a scale. This quarter we are looking at Rs 1,000 crore of loans under this scheme," Sengupta said, adding the rate offered to these customers will be a blended one NBFCs.

"It will be win-win for customers as we will be offering a rate what we charge to our customers," she said.

The bank will be looking at various segments like SMEs, housing, loan against property under the scheme.

Sengupta said RBI has clarified that co-origination of loans is not only for creating priority sector assets but also for non-priority sectors.

"The first thing that comes is it is for priority sector but RBI has never said it is not available for non- priority sectors. In fact, our policy is covering both priority and non-priority sectors and when we asked for a clarification RBI said very clearly that it nowhere bars us, from taking it for non-priority sector," she added.

The lender is also looking at onward lending of Rs 3,500 crore to corporate and agri-finance in the quarter.

The BoB counter closed 1.71 percent Rs 95.05 on the BSE while the benchmark rallied close 2.2 percent.