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Tag: Shriram Finance

  • Top NBFCs seek RBI nod to raise retail deposits

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    MUMBAI: Large non-banking finance companies (NBFCs) have urged the central bank to allow them to raise deposits from retail investors-a move they say would create a level playing field among finance companies and improve transmission of policy rates, people familiar with the matter told ET.

    This request was conveyed by select finance companies to the Reserve Bank of India (RBI) governor Sanjay Malhotra, during a closed-door meeting held on Monday.

    Except for a few NBFCs with legacy licences, most NBFCs are barred from raising retail deposits. Bajaj Finance, Shriram Finance, and Mahindra Finance are among the few NBFCs that are permitted to accept retail deposits. The governor met the CEOs of NBFCs, housing finance companies, microfinance institutions, and industry representatives on Monday.

    To be sure, the RBI has long resisted demands from well-rated NBFCs to be allowed to garner retail deposits, something that is the funding mainstay for banks.

    “The critical issue here is that bank deposits, up to Rs 5 lakh, are insured by DICGC or Deposit Insurance and Credit Guarantee Corporation, unlike NBFC deposits. That is one of the concerns preventing the regulator from issuing new deposit-taking licences to finance companies,” said an economist, who declined to be named. “The regulator would always err on the side of caution.”

    NBFCs that are allowed to raise deposits face strict limits. Retail deposits can’t exceed 1.5 times their net owned funds. The term deposits must have tenures ranging from 12 to 60 months, and interest rates are capped at 12.5% per annum.

    As of March 2025, retail deposits accounted for about 12.5% of resources deposits raised by NBFCs-D, the RBI said in its annual Trend and Progress report. The report noted that five major NBFC-Ds account for 96.9% of aggregate deposits.

    Speaking to ET, Jairam Sridharan, MD of Piramal Finance, hinted that while NBFCs seek a stable liability structure, few aspire for a banking licence that would allow retail deposit mobilisation.

    “Few NBFCs have the skills to do deposit management. It’s a very different ballgame than giving customers your money. Asking customers for their money requires trust and a certain level of fiduciary abilities internally in governance architectures. Maybe there are 10 or 12 NBFCs which have anything close to that kind of ability, the remaining 9,500 probably don’t have it,” Sridharan said in an interview on November 6, 2025.

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  • Bajaj Finance, Shriram Finance follow banks, hike FD rates

    Bajaj Finance, Shriram Finance follow banks, hike FD rates

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    Two leading NBFCs -Bajaj Finance and Shriram Finance -have hiked rates on term deposits following a slew of deposit rate hikes by banks in Q4 FY24.

    While traditionally NBFCs offer higher deposit rates than banks, intensified competition for deposit accretion has forced NBFCs to compete with smaller private banks and small finance banks which have turned more aggressive on rates.

    Currently, medium and small private banks are offering FD rates up to 8.5 per cent for regular citizens and up to 9.0 per cent for senior citizens, whereas small finance banks are giving interest of up to 9.25 per cent.

    Bajaj Finance has increased FD rates for most tenures by up to 60 bps, effective April 3. FD rates have been hiked by up to 45 bps for deposits with a tenure of 25-35-months, by 40 bps for 18 and 22-month deposits, and by 35 bps for FDs with a tenure of 30 and 33 months.

    For senior citizens FD rates have been hiked by up to 60 bps in the 25-35-month tenure and by 40 bps in the 18-24-month tenure. 

    “Senior citizens can continue to avail FD rates of up to 8.85 perc ent and non-senior citizens can take benefit of rates of up to 8.60 per cent by booking digitally in the 42-month tenure,” the company said in a release.

    Another NBFC Shriram Finance has raised FD rates by 5-20 bps across deposits maturing in 12 to 60 months. The rates effective April 9 go up to maturities that range between 12 and 60 months, effective April 9.

    Deposits between 12 and 36 months will earn up to 7.85 per cent whereas those between 36 and 60 months will earn up to 8.8 per cent interest. Further, an additional 50 bps is being offered to senior citizens and 10 bps to women depositors. Effectively, senior citizen women investors can earn up to 9.4 per cent interest.

    Fund raise

    Like banks, NBFCs too are struggling to raise funds to support the sustained pace of credit growth. In addition to increased competition from banks for deposits, NBFCs have also seen normalisation in bank credit lines due to repeated warnings by the central bank on increasing inter-connectedness between the two sectors, making deposit accretion even more crucial.

    While banks have been hiking rates through H2 FY24 on various maturity buckets, NBFCs have less flexibility in changing deposit rates. Further, a lot of these lenders were also waiting for the end of the quarter and the financial year to protect their margins for the reported period, analysts said.

    Deposit growth for most private banks accelerated during Q4 to 14-26 per cent. Sequential deposit growth too was higher at 4-15 per cent compared with 2-8 per cent in the previous quarter, as per provisional numbers declared by banks. Small finance banks saw high growth of 24-50 per cent.

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