Non-banking finance companies (NBFCs) engaged in commercial vehicles financing do not think the 25 basis point hike is very dramatic or likely to have a serious impact on their operations.

Mr R. Sridhar, Managing Director, Shriram Transport, said the cost of funds is expected to become dearer, but is not going to have a negative impact on his company as it has a diverse portfolio to raise funds. The company has a cash balance of Rs 4,000–5,000 crore. Currently the average cost of funds is about 10.5 per cent.

It is relief that the Reserve Bank of India did not raise the Cash Reserve Ratio which has ensured that the liquidity will not be tightened further, said Mr Sridhar. No major shifts in call money market rates shows that the market had anticipated the hike in repo and reverse repo.

Mr T. T. Srinivasaraghavan, Managing Director, Sundaram Finance, said, “There have been several increases in recent months both in the deposit and the lending rates. This 25 bps hike is not trigger enough for another round of increase. One has to wait and watch as to how this pans out, especially amongst the banks.”

N. Srinivasan, Director-Finance, Murugappa group, said the cost of funds is likely to go up only when banks hike their base rates.

Talking about Cholamandalam Finance, Mr Srinivasan said that the commercial vehicle finance company has sanctioned limits from banks which would take care of its fund requirement during the short run.

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