Nbfc Lending Rates Declined Around 200 Bps In April

Lending rates of leading non-banking finance companies (NBFCs) fell by 100 to 200 basis points in April in the wholesale and retail segments. This follows a corresponding fall in the cost of borrowings by way of deposits and bank finance thereby allowing the NBFCs to retain their spreads.

Following the credit policy, leading NBFCs have announced a reduction in their deposit rates. Kotak Mahindra Finance Ltd (KMFL), for instance, has reduced fixed deposit rates by 100 to 150 basis points. As of now, interest rates charged by KMFL range between 14 per cent and 15.5 per cent.

According to Kamlesh Rao of KMFL, While deposit aggregation might go down there is not likely to be any change in percentage share of each NBFC.

 

He further added that KMFL was not looking at a phased reduction but adjustments based on market conditions.

KMFLs corporate lending rates have come down by 100 basis points to 20-23 per cent following a reduction in their borrowing costs by around 100 basis points KMFLs auto finance arm, Kotak Mahindra Primus Ltd, have reduced auto finance rates by 100 basis points across the board to 21-24 per cent depending on the tenure.

Apple finance too has seen a drop in its corporate lending rates by 100 basis points. The company is likely to reduce the rates by another 100 basis points within the next 30 to 45 days.

Its lending rates to the retail sector will range between 21 and 23 per cent while rates to the wholesale (corporate) sector between 21 and 22 per cent, said V R S Swamy, Senior vice president at Apple Finance.

According to Anish Kumar, vice president at Lloyds Finance, the rate reduction is driven by market forces based on which the NBFCs constantly re-evaluate the benchmark rate by which they lend. Mostly we price our lease and hire purchase rates by risk assessment. Lloyds has witnessed a 50 to 100 basis points drop in its corporate lending interest rate in April.

Meanwhile Lloyds auto finance rates have also fallen by about 100 basis points to 24.5 to 25 per cent, according to Ramesh Paniker, vice president at Lloyds. Lloyds fixed deposit rates are also to come down by approximately 100 basis points effective June 1, 1997 to 15 to 18 per cent depending in the maturity of the liability.

Anagram Finance, also is in the process of affecting a rate cut. According to Satish Nadkar, vice chairman and managing director, Anagram is in the process of lowering the interest rate on fixed deposits and is affecting a similar cut in auto finance lending rates. As of now, its auto finance rates are 24 to 26 per cent and its fixed deposit rates averages 16 per cent.