2 min read.Updated: 11 Oct 2018, 08:21 AM ISTAparna Iyer
NBFCs benefit hugely through securitization as short-term liquidity problems get fixed and capital is freed up
India’s largest lender, State Bank of India (SBI) is the new friend in need for non-banking financial companies (NBFCs). Investors in NBFCs lost no time in welcoming the liquidity lifeline that SBI threw on Tuesday and have driven up the stocks of these companies. SBI said it would treble the amount of loans it buys from finance companies to about ₹ 45,000 crore for the current fiscal year. The lender has on an average been buying small chunks of loan portfolios, roughly ₹ 15,000 crore every year, to meet its mandated priority sector targets. Media reports indicate that other banks will also begin to look at increasing purchases.