Another risk stems from the RBI’s proposed framework to ban NBFCs’ revolving credit/flexi loans. Around 8-9% of Tata Capital’s book falls into this category, but less than 5% is actually used as a true revolving line, according to the management. Loan against securities and channel financing contribute 95% to the flexi exposure, which will be harder to transition to term loans. Still, 80% of customers do not have access to similar facilities from banks, and the management expects the regulations to evolve materially from the current draft.
