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Kerala gold loan NBFCs tap NCDs to raise funds as banks get stingy

Wednesday, October 21, 2020


Non-banking financial companies (NBFCs) in Kerala, particularly those dealing in gold loans, are overwhelmingly opting for Non-convertible debentures (NCDs) for mobilising funds. 

NCDs, which cannot be converted into shares, are used by corporates to raise long-term funds. 


In 2020, nine out of the 12 NCD issues in the country are from Kerala. This is the highest percentage of Kerala NBFCs (75%) in India going for NCDs in a year.

This list is till September 30, 2020 and more NCD issues from the state are in the pipeline. Interestingly, eight of the nine NCD issues from the state are by gold loan NBFCs. 

So far, Kerala firms have issued NCDs for nearly Rs 1,900 crore this year. 


The details of NCD issue of Muthoot Finance, for which the draft was filed with SEBI on September 30, are yet to be finalised, but it is expected to be a mega offer.

The previous highest percentage was in 2014, when 14 NBFCs from Kerala out of a total of 25 (56%) opted for NCDs. The percentage was 52 in 2015. 

Last year saw 11 NCDs of Kerala companies out of the 31. 


Higher success rate of NCDs is prompting Kerala companies to go for more such offers.

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