A teller agent verifies the authenticity of Five Hundred Rupee currency notes tendered by a customer at its Connaught Place branch in New Delhi, India (Photographer: Amit Bhargava/Bloomberg News)

Cost Of Funds Is Rising, Says Tata Capital’s Sabharwal

Money is available in the market, but at a higher rate of interest, said Tata Capital's Managing Director and Chief Executive Officer Rajiv Sabharwal.

"Most of the lenders are trying to move to better managed companies, better governed companies and better rated companies,” he told BloombergQuint in an interview. “So, while larger companies are still seeing money come to them, the smaller ones are facing challenges."

The comments come after the Monetary Policy Committee headed by Reserve Bank of India Governor Urjit Patel changed, on Oct. 5, its policy stance from neutral to calibrated tightening. The committee also spoke of tighter norms for non-banking financial companies, in the aftermath of the IL&FS crisis.

Also read: RBI To Tighten Asset-Liability Norms For NBFCs

There could be some slowdown in lending if liquidity is available as it was in the past, he said. The RBI has already taken several measures to increase liquidity in the markets and is expected to continue to do so.

However, demand remains unchanged over the last ten days, he said. "In today's market we are seeing strong demand, especially in the rural side. “We are seeing capacity utilisations also better, so urban demand is also good," he said.

Watch the full interview here: