Bank credit score to NBFCs grew in double digit in FY22 with excellent financial institution credit score to them rising by 10.4 per cent to Rs 10.5 lakh crore on the again of enchancment in general financial actions and banks’ renewed deal with the NBFC sector following enchancment of their steadiness sheets, says a report.
In absolute phrases, in keeping with an evaluation by Care Ratings, financial institution credit score to non-banking monetary firms (NBFCs) expanded by Rs 99,000 crore in FY22, from FY21.
The quantity doesn’t embrace liquidity given by banks to them via securitization route (direct task and pass-through certificates) and in addition banks’ investments in NBFCs’ debt devices.
Meanwhile, mutual funds’ debt publicity via business papers (CPs) and company bonds, to NBFCs rose 14.3 per cent to Rs 1.7 lakh crore in FY22 as NBFCs issued extra CPs to fund IPOs and as they shifted from long-term to short-term investments on expectation of hike in rates of interest.
In absolute phrases, it expanded by Rs 21,000 crore, says the report. Outstanding investments in CPs of NBFCs grew 25 per cent to Rs 73,000 crore in FY22 because the yr was the very best within the IPO historical past and NBFCs issued CPs price Rs 15,000 crore to fund IPOs.
The proportion share of funds deployed by mutual funds in CPs of NBFCs in FY22 stood at 4.4 per cent of debt belongings underneath administration (AUMs), up from 3.6 per cent in FY21.
Banks credit score publicity to NBFCs fluctuated round Rs 9 lakh crore-mark for the higher a part of FY22 and crossed Rs 10 lakh crore threshold in December 2021. And from there, it continued its upward trajectory and crossed Rs 10.5 lakh crore in March 2022 as capital market charges hardened and NBFCs turned to avail comparatively cheaper financial institution loans.