Chandigarh: Rising default rate coupled with high cost of funds have dealt a severe blow to Non-Banking Financial Companies (NBFC) in the northern region as almost 50% of them operating as asset finance companies have shut down their business operations in the last three years.

NBFCs, which are considered as the backbone of the commercial vehicle finance segment in Punjab, Haryana, Himachal Pradesh and UT Chandigarh, have strongly pitched for covering them under Securitisation Act 2002 and Debt Recovery Tribunal, like banks, in a bid to expedite recovery process.

“50% of asset finance companies in this region have been forced to close their shops in last the three years or so due to rising delinquencies and unsupportive attitude of government in timely realisation of outstanding loans from defaulters,” Punjab and Haryana Finance Companies Association (PHFCA) Secretary General Alok Sondhi said.

According to PHFCA, the default rate in NBFCs has risen by five times to 15% against 3% in past 3-4 years. “The strength of NBFCs in this region has squeezed to 200 from 450 three years ago as they were finding extremely difficult to carry on finance business due to rising default,” said an official of PHFCA.