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s_praharaj
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Joined: 10/Sep/2006
Location: India
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Posts: 357
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   Posted: 03/Jan/2008 at 6:33pm |
Those NBFCs, who are engaged in other things like Insurance, mutual funds etc are doing well like sundaram finance, Birla sunlife etc. Those who are purely in financing are risky.
The NBFCs are also controlled by RBI. Because of RBIs stringent rules many of them are finding it difficult to operate. THe deposit taking NBFCs are supposed to declare their NPA. (Net Worth more than 25 crores) like sundaram finance.
Since NBFC loans are risky they charge very high interest to sub prime borrowes.
Housing finance NBFCs are governed by NHB, not RBI.
NBFCs disclose their NPAs to RBI.
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Shashi Praharaj
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xbox
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Joined: 10/Sep/2006
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Posts: 2001
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Posted: 24/Jan/2008 at 1:52am |
Problem for many..... 
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Don't bet on pig after all bull & bear in circle.
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kulman
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Joined: 02/Sep/2006
Location: India
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Posts: 9319
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Posted: 06/Mar/2008 at 6:46pm |
GE Money India is believed to have begun the process of restructuring its share capital before selling off its personal loans and mortgage businesses in India. The move follows the indicative bids quoted by the interested buyers at half the company’s net worth. This is one of the rare incidents of a seller restructuring net worth of a business, after putting it on the block.
The broad contours of the proposed restructuring indicate that GE Money will reduce its net worth from $400 million to nearly $160 million by shrinking its equity capital through a buyback. Net worth refers to shareholders’ equity.
GE Money’s assets stand at around Rs 6,000 crore. Assets are nearly four times of equity which, post-restructuring, will be nearly nine times. This means, the return on capital will go up substantially. The price to be paid by the acquirer will also come down, making it attractive for the prospective bidders.
The interested parties are learnt to have indicated a bid price of around $200 million while submitting their initial bids on February 18. Five parties, namely the Aditya Birla Group, Tata Capital, Indiabulls, Carlyle and Future group are in the race. This price indicates a 25% premium over $160 million, which could be the restructured net worth.
Sources said the bidders are interested to acquire personal loans and mortgage businesses of GE Money mostly because of the company’s wide network. It has 180 offices in 120 towns with 450 full-time employees and 2600 contingent staff. " The asset of these businesses is moderate, but the infrastructure is lucrative," said a source close to a bidder.
For the Birlas and the Tatas, the acquisition will mean their entry into consumer finance business. The acquisition will consolidate the position of Future Capital and Indiabulls in the consumer finance space.
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Edited by kulman - 06/Mar/2008 at 6:46pm
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Life can only be understood backwards—but it must be lived forwards
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deveshkayal
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Joined: 04/Sep/2006
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Posted: 06/Mar/2008 at 9:32pm |
My sense is Aditya Birla Group will acquire GE Money India and IL&FS broking to get a headstart in the consumer finance and brokerage space. PE business has already started.
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"You don't need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beat the guy with a 130 IQ. Rationality is essential"- Warren Buffett
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kulman
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Joined: 02/Sep/2006
Location: India
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Posts: 9319
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Posted: 26/Mar/2008 at 9:36pm |
HDFC Bank is planning to start a non-banking finance company (NBFC). Sources said the bank could get into investment banking through this NBFC, the license for which was received around September last year.
The NBFC has been tentatively called HDB, but there could be a change in the name for the launch, sources said.
Though HDFC Bank officials could not be reached, sources said the bank “will try to fill the gaps in its current business through this NBFC.”
“We will see that there are no gaps in our products. There will be a clear cut direction to this business (NBFC) vis-a-vis the bank. Obviously an NBFC has a lot of advantages over a bank, which can be tapped,” an official said.
Banking analysts said an entry into investment banking would be a logical extension for HDFC Bank, particularly after the acquisition of Centurion Bank of Punjab last month.
Ananda Bhoumik, senior director, banking at Fitch Ratings, said an investment banking arm will complete the picture for HDFC Bank.
“NBFC’s don’t have statutory requirements like the mandatory 25% investments in SLR securities or keeping aside 7.5% of deposits as cash reserve ratio or even borrowing daily through the call money market,” said an analyst with a foreign brokerage.
Analysts say HDFC Bank can support and shore up its broking arm HDFC Securities through this NBFC. “They can provide margin funding through the NBFC, which is not permitted to be done by the brokerage or the bank. These are ways of getting around the law and hence so far foreign banks and private banks are going in for an NBFC but public sector banks are not doing it,” an analyst at a private broking house said.
The branch openings will also be easier through an NBFC.
Foreign banks have been using the NBFC route for long to get around poor allotment of branches from the RBI.
US giant Citibank famously did it through its retail loan NBFC Citifinancial. Other foreign companies like GE Money and Temasek-owned Fullerton have also done roaring business by financing small loans through their NBFCs.
However, high interest rates since last year have slowed the appetite for such loans from customers and foreign banks are now rethinking their strategy for NBFCs.
Deutsche Bank is another foreign player that has got a NBFC license around the same time as HDFC Bank. However, the German bank is still waiting for the right opportunity to launch its business, particularly after the slowdown in the business because of higher rates. Like HDFC Bank, it may roll out its NBFC later in 2008
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Life can only be understood backwards—but it must be lived forwards
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kulman
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Joined: 02/Sep/2006
Location: India
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Posted: 28/Mar/2008 at 11:32pm |
G E is divesting consumer-finance businesses in the U.K. and Germany and selling its U.S. corporate credit-card unit to concentrate on higher- margin areas and developing markets, GE Money's chief executive said.
``This is a thoughtful effort to really, aggressively look at where we make money, where we don't and where we should have capital redeployed,'' William Cary who was promoted to lead the consumer-lending unit on Feb. 7, said in a telephone interview from London.
London-based GE Money is departing from slowing or stalled credit card markets such as those in the U.S. and U.K. to focus on developing markets like Poland and India, Cary said. The company also is looking to western markets including France where its mix of products yields higher growth, he said.
GE Money, as it was exiting WMC last year, agreed to buy part of UniCredit SpA's Bank BPH unit in Poland for 625 million euros ($893 million). In September, GE Money said it would invest $200 million in India by 2011.
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Life can only be understood backwards—but it must be lived forwards
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deveshkayal
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Posted: 18/Apr/2008 at 5:04pm |
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"You don't need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beat the guy with a 130 IQ. Rationality is essential"- Warren Buffett
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Musketeer
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Joined: 12/Feb/2008
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Posted: 18/Apr/2008 at 5:25pm |
Yes, indeed a good article.
The differences b/w NBFC and regular banks and how the handicaps of the former are being compensated by somewhat lesser regulation. Interesting. Seems I'll have to start looking at Reliance Capital, though generally I am averse to buying into any ADAG stocks.
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Be fearful when others are greedy. Be greedy when others are fearful.
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