Tata Capital in discussions to secure Rs 10,000 crore through debt fundraising

• ByStartupStory     |    May 1, 2023

According to a banker, Tata Capital is increasing its focus on the retail loans sector, with a major portion of the current quarter’s funds dedicated to home loans and personal loans. The company is adopting an aggressive strategy to capture a larger market share in this space.

Tata Capital, a subsidiary of Tata Sons, is currently in discussions with lenders to raise INR 10,000 crore through debt for on-lending purposes. The company’s Board of Directors has given the green light for the merger of Tata Capital Financial Services Limited (TCFSL) – a wholly owned subsidiary of Tata Capital, with Tata Cleantech Capital – an 80.5% owned subsidiary of TCL. This strategic move is aimed at streamlining operations and enhancing the company’s overall performance.

A source from the banking industry has revealed that Tata Capital’s debt fundraising efforts in the current quarter will aid in expanding the balance sheet of the merged entity resulting from the approved merger of Tata Capital Financial Services Limited and Tata Cleantech Capital. The company is making a strong push into the retail loans sector, with a focus on home loans and personal loans, as indicated by a banker. This strategy is part of the company’s efforts to assert its dominance in the market and capture a larger share.

Tata Capital has been classified as an upper layer Non-bank financial institution (NBFC) by the Reserve Bank of India (RBI). According to the RBI’s regulations, Tata Capital, as an upper-layer NBFC, will have to go public within the next two years. When approached for a statement, a spokesperson for Tata Capital declined to comment on the matter.

It is worth noting that the Tata group has another extensive financial services arm known as Tata Motors Finance, which offers loans for dealer and vehicle financing. Industry experts have highlighted the significance of the financial services business to the Tata Group, and given Tata Sons’ commitment to ensuring TCL remains sufficiently capitalised, they anticipate that Tata Sons will continue to offer equity support to maintain a stable capitalisation and liquidity profile.

In the financial year 2019, Tata Sons invested Rs. 2,500 crore, followed by an additional Rs. 1,000 crore in the March quarter of the financial year ending March 2020. According to data disclosed to credit rating agencies, TCFSL’s loan portfolio was Rs. 59,716 crore as of September 30, 2021, compared to Rs. 55,323 crore as of March 31, 2022. As of September 30, 2021, 53% of TCFSL’s loan book was made up of wholesale loans, including 35% in working capital loans to corporations and 15% in bill discounting and channel financing. The remainder of the loan book was in retail loans, including personal/business loans and financing for automobiles.

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