The Reserve Banks new guidelines for non-banking finance companies (NBFCs) will result in a shakeout in the financial sector. Data available with the BS Research Bureau indicates that 47 NBFCs with a rating below A, and 24 companies which have not been rated by any of the three rating agencies, will come under tremendous strain as they will have to return fixed deposits worth Rs 1,410 crore raised during 1996-97.
A study of 138 NBFCs shows that six AAA-rated companies and 14 of the 27 AA-rated companies already have fixed deposits in compliance with the new RBI regulations. Of 34 A-rated companies, 14 companies have fixed deposits in excess of the new RBI norms.
Thirteen AA-rated companies whose net owned funds are less than the level stipulated by the RBI will have to return Rs 824 crore to their depositors. Fourteen A-rated companies which fall below the RBIs new guidelines will have to return Rs 976 crore worth of fixed deposits.
Forty-seven companies rated below A, which are collectively holding fixed deposits worth Rs 767 crore, will find their net owned funds of Rs 717 crore to be of no use. There are 24 non-rated companies with cumulative net owned funds of Rs 880 crore. These companies will either have to obtain ratings for fixed deposit schemes worth Rs 643 crore or refund the money.
Six companies with the highest safety rating of AAA have net owned funds of Rs 952 crore. These cash-rich companies raised Rs 1,325 crore through fixed deposits during 1996-97. None of them have raised FDs over the RBI norms. If the need arises, they can borrow an additional Rs 1,531 crore through FDs.
The 27 companies with AA ratings collectively own Rs 3,314 crore. FDs raised during 1996-97 by them amounted to Rs 4,220 crore, which is Rs 2,293 crore below the new RBI norms.
The BSRB study shows that the aggregate fixed deposits raised by the 138 companies stood at Rs 8,423 crore, whereas the total fixed deposits allowed to them as per the new RBI policy are Rs 10,350 crore.
The companies which are well placed include Apple Finance, which can raise deposits from the market worth Rs 547 crore, Tata Investment Corp (Rs 410 crore), Kotak Mahindra Finance (Rs 362 crore), Bajaj Auto Finance (Rs 310 crore) and Alpic Finance (Rs 279 crore).
The RBI has linked the quantum of the deposits raised by an NBFC to its credit rating and barred NBFCs with net owned funds of less than Rs 25 lakh and a rating below
