It appears that the euphoria which had surrounded the companies like L&T Finance, Mahindra & Mahindra Financial Services, Shriram Transport Finance and LIC Housing Finance appears to be over in the short term as the biggest factor which can hold these companies from going all out are enumerated below:
- The entities that receive the licenses will have to meet PSL (priority sector lending) norms. PSL loans, given their risky nature are seen as a cost burden due to the provision requirement.
- Moreover 25% of the bank's branches have to be opened in unbanked sectors. Currently, a large number of non-banking finance companies have less than 10% presence in rural areas.