NBFCs lure retail investors with high yields as banks tighten purse strings

Tata Capital Financial Services, a subsidiary of Tata Capital, said it would hit the market with tranche 2 of its NCD to raise up to Rs 4,126 crore

As banks become increasingly risk-averse in lending to the non-banking financial companies (NBFCs), while mutual funds and insurance companies slow down their investment of debt papers from the sector, the firms are trying to lure retail investors with high yields in a falling interest rate environment. 

For the companies, non-convertible debentures, or NCDs, also allow them to diversify their liability profile. The Infrastructure Leasing & Financial Services (IL&FS) fiasco and Dewan Housing Finance Corporation (DHFL) defaults, both AAA companies before they stumbled last year, has complicated the situation for the NBFC segment, even as the government and the Reserve Bank