The Hindu : Banks asked to use NBFCs for transport finance

Online edition of India's National Newspaper
Sunday, Feb 29, 2004

Business

Business

Banks asked to use NBFCs for transport finance

By Our Corporate Reporter

CHENNAI, FEB. 28. The partnership between banks and non-banking finance companies (NBFCs) should be that of a wholesaler and retailer and banks, instead of lending directly to small and medium borrowers in the transport sector, should use NBFCs as conduits, according to R. Anand, Chairman, South India Hire Purchase Association. In an interactive session of its members with the CMD of Indian Overseas Bank, Mr. Anand said this would ensure a win-win situation for both NBFCs and banks.

NBFCs, after going through a major churning process, have become a cohesive group at present and were acting as catalysts in the development of the transport sector, Mr. Anand said. Srinivas Acharya, MD, Lakshmi General Finance, said after a shakeout, many finance companies had weathered the storm. With tighter regulatory norms in place, NBFCs were better organised at present, he said.

S. C. Gupta, in his address to the members on the association, said the bank had already extended three per cent of total portfolio of credit of Rs. 18,500 crores to NBFCs. Even this three per cent was not made use of by them he said.

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