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Drop in funding costs: MSMEs struggling while top-rated draw money cheap

Updated : December 01, 2020 02:46 PM IST

AAA rated NBFCs were able to access money at 5-5.5 percent for the last couple of months, but with liquidity being ample the cost of funding for second, third tier NBFCs has come off quite a bit.

“Cost of funding has gone down by 40 bps in first half of FY21,” said Sanjay Chamria, VC & MD of Magma Fincorp in an interview to CNBC-TV18.

According to him, micro, small and medium enterprises (MSMEs) are struggling for funds while top rated companies are drawing money cheap.

Meanwhile, R Sridhar, Executive VC & CEO of Indostar Capital Finance expects further decline in cost of funds.

According to Sridhar, average cost of funds will come down by 25-30 bps by March 2021.

On business front, Indostar is looking at portfolio acquisitions and inorganic moves. The company has decided to wind down corporate business subsequent to IL&FS (crisis).

“There is no impact of corporate lending business exit as retail lending business is going to go up,” added Sridhar.

For entire discussion, watch video
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