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

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Tata Capital, a subsidiary of Tata Sons, is in talks with lenders to raise Rs 10,000 crore in debt for re-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 – an 80.5 percent owned subsidiary of TCL, with TCL.

A banking source said that raising funds for debt in the current quarter will help Tata Capital grow the balance sheet of the combined entity.

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

The company has been designated as a Non-Banking Financial Institution (NBFC) by the regulator Reserve Bank of India (RBI). According to RBI, as a top-tier 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 company under Tata Motors called Tata Motors Finance which provides loans to finance vehicles and dealers.

Analysts said that given the importance of the financial services business to Tata Group and Tata Sons’ plans to maintain adequate capital for TCL, they expect Tata Sons to continue to provide capital support to help Tata Sons maintain a comfortable capitalization and liquidity profile.

Tata Sons has already invested Rs. 2,500 crore in the financial year 2019 and another Rs. 1,000 crore in the March quarter of the financial year ending March 2020.

As per data filed with rating firms, TCFSL loan portfolio amounted to Rs. 59,716 crore on 30th September last year as compared to Rs. 55,323 crore as on March 31, 2022. As of September 30, 2022, last year, 53 per cent of its loan book included wholesale loans, mainly consisting of corporate working capital loans at 35 per cent and bill discounting and channel financing at 15 per cent. The retail portfolio accounted for the balance which includes personal/commercial loans, auto financing and others.