InvestorQ : Is it true that HDFC Bank planning to start NBFC Business?
Sneha Balasubramanian made post

Is it true that HDFC Bank planning to start NBFC Business?

Answer
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Isha Tharwani answered.
1 year ago


Yeah, it is true and HDFC Bank will become the first private sector banks to float an NBFC arm. This will allow the Bank to step up corporate lending. Till now, banks are not allowed to lend more than 15 percent of their net worth to an individual borrower and 40 percent to a corporate group under the Reserve Bank of India (RBI) exposure norms. So with NBFC arm bank can cater services to the customers that were earlier not possible due to the limitation of branch spreading network freely.

As the rules and regulation for NBFC are different, the widespread of services through NBFC will give more business. For example, an NBFC is not required to maintain any cash reserve ratio (CRR) in the way the bank is mandatory to keep. With no CRR to maintain an NBFC can offer higher interest rates on deposits thus, encouraging savings and investment. So HDFC plan to start NBFC is leading a good start to financial lending in remote areas.