NBFC borrowing costs likely to fall with HDFC out of bond market

06 April 2022

Nearly a tenth of borrowing in the bond market could reduce, as HDFCaccounted for that much bonds sold in the country. The merged entity will have access to cheaper deposits to fund the mortgage business. Also, being a banking services provider, the combined company will have less regulatory room than a housing financier to raise funds from long-term institutional bond investors, including insurance companies.

This could be a blessing for other non-banking finance players such as Bajaj Finance, LIC Housing Finance and L&T Finance. Their fund cost could fall, as there would be limited alternatives for fund managers to invest in top-rated financial services bonds. Even the smaller companies in the HDFC Group, such as HDB Financial and HDFC Credila, may benefit too while raising resources.