Tata Capital in talks with lenders to raise Rs 10,000 crore via debt

Tata Capital, a subsidiary of Tata Sons, is in talks with lenders to raise Rs 10,000 crore by way of debt for its on-lending purposes.

The Board of Directors of Tata Capital Financial Services Limited (TCFSL) has approved the merger of TCFSL, a wholly owned subsidiary of Tata Capital and Tata Cleantech Capital – 80.5 per cent owned subsidiary of TCL with TCL.

The debt fundraising in the ongoing quarter will help Tata Capital to grow the balance sheet of the merged entity, said a banking source.

“Tata Capital is getting aggressive in the retail loans segment and the majority of funds raised this quarter will be for home loans and personal loans,” said a banker.

The company has been identified as a Non-bank financial institution (NBFC) upper layer by the regulator Reserve Bank of India (RBI). As per the RBI, as an upper-layer NBFC, Tata Capital will have to list in the next two years.

When contacted, a Tata Capital spokesperson declined to comment.

Interestingly, the Tata group has another sprawling financial services business under Tata Motors called Tata Motors Finance which is providing loans for vehicle and dealer financing.

Analysts said due to the importance of the financial services business to the Tata Group and Tata Sons plans to keep TCL adequately capitalised, they expect Tata Sons to continue to provide equity support to help Tata Sons maintain a comfortable capitalisation and liquidity profile.

Tata Sons has already invested Rs. 2,500 crore in FY2019 and a further Rs. 1,000 crore in the March quarter of the financial year ending March 2020.

As per data submitted with the rating firms, TCFSL’s loan portfolio stood at Rs. 59,716 crore as on September 30 last year as compared to Rs. 55,323 crore as on March 31, 2022. As on September 30, 2022, last year, 53 per cent of its loan book comprised wholesale loans, primarily consisting of working capital loans to corporates of 35 per cent and bill discounting and channel financing of 15 per cent. The retail portfolio accounted for the balance, comprising personal/business loans and financing for automobiles among others.