NBFCs may cut lending rates by 25-50 bps after RBI's move

With the reduction in policy rate by the Reserve Bank, NBFCs say they are likely to cut their lending rates by 25-50 bps over next three-four months.
Thiruvananthapuram-based Muthoot Pappachan Group said it is likely to cut the lending rate of its NBFC arm Muthoot Fincorp.
"With the repo rate cut of 25 bps by RBI yesterday, it will reduce cost of funds or bank borrowing rates and NCD rates for NBFCs like ours by 25-50 bps and hence we do see a cut in our lending rates by 25-50 bps in next 3-4 months," Muthoot Pappachan Group Chairman and Managing Director Thomas John Muthoot told PTI.

"We are likely to cut our lending rates by 25-50 bps by June or early next quarter," he said.
At present, while its cost of funds is hovering at 10.40 per cent, NCD rates are at 9.5 per cent for the company that is mainly into home and auto loans.
Moreover, the company sees growth in credit by 15-20 per cent by the end of the current fiscal.

"With the country's economy picking up, we see an adequate opportunity in lending. We closed the last fiscal at our AUM in lending at Rs 9,500 crore and we expect a growth by 15-20 per cent under the portfolio by the fiscal-end," Muthoot said.

Kolkata-based Srei Infrastructure Finance is also looking at a rate cut by the industry.
"The industry may see a cut in the lending rates by upto 25 bps as an impact of 25 bps cut in repo rate by RBI," the company's Vice Chairman Sunil Kanoria said.
Asked what would be the impact on his company, he said, "If I get the benefit in terms of my company's cost of funds coming down, which is currently hovering at 10.2 per cent, we will definitely pass it on to our customers."
RBI, in its first bi-monthly monetary policy review for the current fiscal yesterday, cut the repo rate by 0.25 per cent to 6.5 per cent. Repo rate is the rate at which RBI lends to banks.