Now Reading: Tata Capital engages RBI on revolving credit ban proposal
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Tata Capital engages RBI on revolving credit ban proposal
Tata Capital CEO Rajiv Sabharwal said the non-bank lender is engaging with the Reserve Bank of India after the regulator proposed banning revolving credit facilities for NBFCs. Sabharwal said the company is…
The Story in Brief
Tata Capital CEO Rajiv Sabharwal said the non-bank lender is engaging with the Reserve Bank of India after the regulator proposed banning revolving credit facilities for NBFCs. Sabharwal said the company is still collating data and will submit feedback. The RBI proposal, released on August 6, would restrict NBFCs to term loans.
Sabharwal said Tata Capital’s exposure to revolving credit is below 5% of its loan book, contradicting a brokerage estimate by IIFL that put it at high single digits to low double digits. He said the company will comply with the final regulation. Industry body FIDC is also collecting feedback from lenders. Some NBFCs had already discontinued such products after earlier nudges from RBI.
The Indian Opinion
The RBI's proposal has sparked predictable hand-wringing about growth and customer stickiness, but Tata Capital's admission of below 5% exposure suggests the impact may be exaggerated. The gap between the company’s internal number and IIFL's estimate highlights the opacity of NBFC books. A more telling test will be whether other large lenders like Bajaj Finance, with higher estimated exposure, follow Tata Capital in voluntarily disclosing their numbers before the final regulation. That would clarify just how much of the industry's growth relies on revolving credit.
Source: bfsi.economictimes.indiatimes.com
This story was synthesised by AI from the source linked above.
