What NBFC crisis? Tata Capital, Bajaj Finserv and Capital First expected to do brisk business

Consumer financing seems to have emerged unscathed in the ongoing liquidity crisis in the non-banking finance sector. In this festive season, consumers looking to shop for durables and electronics are unlikely to face any NBFC financing challenges compared to their peers in the housing and automobile market.

Despite the fact that the overall market sentiments may be a bit low, leading non-banking finance companies (NBFCs) in the consumer financing space such as Tata Capital, Bajaj Finserv and Capital First are expected to do brisk business this shopping season.

Vivek Chopra, chief product officer, Tata Capital Financial Services, said that retail- and consumer-driven financing is witnessing good traction. "The response is very encouraging over the past few weeks, and we are seeing a good enough buying trend in consumer durables as well as used car space especially post Navratri," he said, adding that on an overall basis Tata Capital has been significantly growing its retail business this year compared to the previous year.

Raising funds hasn't been an area of concern either as NBFCs continue to raise money through various sources including banks, non-convertible debentures (NCDs) and commercial papers (CPs). Tata Capital successfully raised roughly Rs 3,500 crore via NCDs in September 2018.

The consumer/retail financing space hasn't got impacted the way realty or residential housing lending space has, owing to various reasons. Small-ticket size and well-capitalised market players were a few factors driving lending in this segment, experts said.

"When it comes to higher ticket size products such as business loans on the unsecured side or loans against property, there were some niche players operating in this space. So players like DHFL, India Infoline, Edelweiss, Indiabulls, Shriram City Union Finance have gone slow, withdrawn from the market for a short term, have done a lot of tightening and are lending very selectively. On the consumer financing side, Fullerton has slowed down significantly even for smaller ticket size lending as well as personal loans. This is most likely owing to a tight capital situation," said an industry source requesting not to be quoted.

Executives from Bajaj Finserv and Fullerton India did not respond to DNA Money queries regarding market concerns about a possible slowdown in the consumer/ retail financing space. Capital First and Shriram City Union Finance could not be reached.

An on-the-ground survey with retailers of durables and electronics also ruled out any slowdown in consumer financing owing to the impact of the overall NBFC liquidity crisis. Bajaj Finserv led the pack of potential lenders followed by Tata Capital and Capital First. Shriram City and Fullerton India are not high up in the list of possible consumer/retail financing options.

"Financing schemes from Bajaj Finserv, Tata Capital and Capital First are on offer for consumers looking to purchase durables and electronics products. Besides, consumers also have the option of buying through an equated monthly instalment (EMI) scheme using credit/ debit cards," said a floor staff from Reliance Digital, the largest retail chain of consumer durables and electronics in India.

The durables and electronics space has witnessed good buying momentum in the recent past though that was not the case with the two-wheeler segment which faced some challenges. "The entire purchase decision was delayed by a few weeks owing to lack of clarity about costs associated with third-party insurance and so on. The durable and electronics space though has seen good growth of 25% to 30% over the previous month and certainly a far higher number over the last year. While we are still in the middle of the festive buying season right now, as far as consumer interest is concerned, there is definitely a significant growth," said Chopra, adding that Tata Capital has also introduced festive shopping offers on durables, electronics and two-wheeler automobile products.

FULL STEAM

Small-ticket size and well-capitalised market players cushioned the impact of NBFC liquidity crisis on consumer lending segment  

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Consumer lending firms continue to raise money through various sources including banks, non-convertible debentures and commercial papers

Source: DNA Money