Increase in repo increases demand for FDs from NBFCs, housing finance companies

Two consecutive repo rate hikes by RBI Fixed Deposits (FDs) have proved to be a bonanza for Housing Finance Companies (HFCs) and Non-Banking Finance Companies (NBFCs) with increased volumes. Several HFCs and NBFCs hiked interest rates on FDs by 40 basis points and 50bps, respectively (100bps = 1 percentage point) following the central bank’s May and June repo rate revisions.
With the second round of repo rate hikes by 50bps effected by the RBI last Friday, the third such hike in four months, some banks
And NBFCs have already revised their rates on FDs.
Sundaram Home Finance After the interest rate hike, the volume of FDs rose six times in June compared to May. In May this year, Chennai-based HFCA raised Rs. 6-7 crore gross receipts were seen. Then the gross receipts in the month after the first rate revision rose to Rs. 40 crores has gone over. It rose further in the following months following another revision. The company only in the month of July Rs. 60 crore gross receipts were registered.
Sundaram Home Finance MD D Lakshminarayanan “We have added over 2,000 new deposits in June and July this year, compared to around 1,700 in the same period in the previous three years,” he said.
PNB Housing Finance has increased the value of FDs by 65% ​​from April to June. Senior President, Equitas Small Finance Bank Murali Vaidyanathan said NBFC FD volumes from individuals and senior citizens have seen an increase.
ICRA FDs are one of the alternative funding sources for NBFCs. ICRA VP Manushree Sagar said, “With further revisions in policy rates, deposit rates may increase further.”

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