Business News

Warburg Pincus-owned mortgage lender Truhome Finance has raised $100 million in external commercial borrowing from DBS Bank and Sumitomo Mitsui Banking Corporation (SMBC).The lender with about Rs 17000 crore assets under management has borrowed the fund at a coupon which is benchmarked with Secured Overnight Financing Rate (SOFR). The blended cost of it was 7.9%, which is 160 basis points over SOFR, a senior company official said.The non-banking finance company has secured this funding through a social loan facility. DBS Bank and SMBC have invested $50 million each in the loan syndication. The tenure of the loan is three years.The ECB will help the lender diversify its resources. This is the first external borrowing by the company after it was taken over by Warburg Pincus."This ECB facility shows the trust that marquee investors have in our business model," Truhome Finance managing director Ravi SubramanianThe global private equity firm bought the non-banking finance company from Shriram Capital and San Francisco-based PE Valiant Capital Management for Rs 4,630 crore in December last year. Warburg invested another Rs 1,200 crore into the company last year itself and has committed to infuse more capital whenever needed.The company has a network of 165 branches across 17 states and union territories. Major industrial states such as Gujarat, Maharashtra and Tamil Nadu accounted for 18%, 18% and 16% of the AUM respectively, at the end of December.The company focuses on borrowers from the middle-income group and low-income groups, mostly residing in urban and semi-urban regions, and has an average loan book ticket size of Rs 18 lakh, which is significantly higher than its peers in the affordable housing finance space. India Ratings & Research said in its rating report last month.About three-fourth of Truhome’s borrowers are self-employed and operating in a formal sector.

Transmission of Reserve Bank of India’s first rate cut in five years into deposit and lending rates were mixed in February. While banks lowered rates on new deposits, they did not offer lower rates to new loan borrowers immediately.Data released Thursday by the RBI showed that the weighted average domestic term deposit rate on fresh deposits of banks fell to 6.48% in February from 6.56% a month ago. On the outstanding deposits, the rate remained unchanged at 7.02%.At the same time, the weighted average lending rate (WALR) on fresh rupee loans of banks increased to 9.40% in February from 9.32% in the previous month. This was because MCLR had gone up by 5 basis points in February. In the subsequent month, one-year median MCLR fell by 5 bps to 9.00% in March, the RBI data showed.But WALR for outstanding loans fell to 9.80% in February from 9.87% a month ago, indicating that existing borrowers may have benefitted from the RBI’s policy rate cut.WALR reflects loans priced to external benchmarks as well as those linked to banks’ marginal cost of funds.According to experts, fall in MCLR could reflect in the overall lending rates for fresh loans in March. The transmission of regulatory rate cuts happens quickly in case of repo-linked benchmark rate. The transmission in case of MCLR-linked rates, which depend on banks' costs, takes a longer time of at least two quarters for the effect to play out.Nearly 61% of floating rate loans were linked to external benchmarks, while 36% were priced on MCLR at the end of December, according to the central bank data. Private sector banks have a higher share of externally benchmarked loans at 86%, while the same number for public sector banks is at around 47%.Analysts said that because public sector banks have lower percentage of loans priced to external benchmarks, the impact on net interest margin in the fiscal fourth quarter due to downward revision in loan rates will be lesser compared to their private peers.

State-owned Uco Bank has fixed the price of its Rs 2000 crore qualified institutional placement at Rs 34.27 per equity share, the bank said Thursday.The price, fixed at a premium of Rs 24.27 over the face value of Rs 10 per equity share, was at a discount of 4.99% to the floor price of Rs 36.07 per equity share, the lender said in a regulatory filing to the stack exchanges.The QIP would help the bank reduce the government stake to about 3% from the current holding of 95.39%.Uco's share price closed Thursday 1.92% higher at Rs 36.68 on BSE.A couple of days back, Indian Overseas Bank raised Rs 1437 crore by selling shares to institutional investors at Rs 40.57 per share, also at a 5% discount over the floor price.The Central Bank of India is also in the process of raising equity capital via the QIP route.