More fintech NBFCs tap debt markets for expansion
MUMBAI : Fintech startups operating as non-banking financial companies (NBFCs) are increasingly turning to the bond market to secure funds for expansions due to the rising costs of bank borrowing. JM Financial reported that Fintech NBFCs raised ₹1,818 crore from the bond market in 2023, up from just ₹450 crore in 2022. Clix Capital and Krazybee raised over ₹300 crore, each.
while DMI Finance and Kisetsu Saison Finance raised ₹200 crore, each. In fact, in 2023, NBFCs have raised as much ₹2 trillion from the debt market. This trend is set to surge as bank borrowing costs increase following the Reserve Bank of India’s November decision to raise risk weights on NBFCs.
Borrowing rates for the firms are expected to climb by 15-25 basis points. “With demand for credit picking up, bank credit getting expensive, and tighter liquidity conditions, fintech NBFCs are accessing the debt market. Several of them have already raised equity over the last 1-2 years and their ability to leverage is also better," Ajay Manglunia, managing director and head of investment group, JM Financial, said.
Fintech NBFCs borrow from different sources including banks, venture debt funds and bond market to fund their growth. Saurabh Rungta, managing director and chief investment officer (CIO), Avendus Wealth Management, said firms which do business prudently, are able to access the market, increasing the size of a fund over years. For instance, those that have raised ₹25-30 crore, say, in 2020 are now able to raise ₹100-150 crore from the market.
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