Archive · 29 Sep 2026
Tata Capital stays upbeat despite funding and regulatory pressures
Tata Capital lends money to people and businesses.
It expects its business to grow by 23-25% because its Retail and SME loans are performing strongly.
The company wants these loans to form most of its business in the future.
Its loan quality is currently described as comfortable.
However, high crude oil prices could make it harder for some small businesses and vehicle operators to repay loans.
Tata Capital is also paying more to obtain money, which can reduce its profit margins.
It is responding by offering some higher-interest products and using more borrowing linked to market rates.
A proposed RBI rule could limit some revolving-loan products, but the company expects the final rule to be different.
Tata Capital says only a small part of its total loan book is a true revolving facility.
Tata Capital retained its 23-25% growth guidance, supported by Retail and SME momentum.
Retail and SME portfolios are expected to reach 85-87% of the mix by Q3FY27.
Asset quality remains comfortable, although elevated crude oil prices could pressure SME and commercial-vehicle loans.
Rising funding costs are pressuring margins, prompting greater use of repo-linked borrowing and higher-yielding products.
Management expects the final RBI rules on revolving credit to differ materially from the current draft.
- Who
- Tata Capital, its management, the Reserve Bank of India, and other financial-industry stakeholders.
- What
- Tata Capital maintained its 23-25% growth guidance while addressing funding-cost, margin, asset-quality, and proposed revolving-credit regulatory risks.
- When
- The outlook was discussed at Tata Capital's recent analyst meeting; portfolio-mix changes are expected from Q3FY27.
- Where
- The article refers to Tata Capital's analyst meeting and its BSE-listed shares.
- Why
- Growth is being supported by Retail and SME demand, while the company is adjusting to higher funding costs and possible RBI rule changes.
Tata Capital management
Regulatory and market risks
Growth outlook
Tata Capital management
Management remains confident in achieving 23-25% growth, citing healthy Retail and SME volumes and an expected recovery in commercial vehicles.
Regulatory and market risks
High crude oil prices could affect SME and commercial-vehicle customers, while higher borrowing costs and competition may limit growth and margins.
Revolving-credit rules
Tata Capital management
Tata Capital expects the final RBI framework to change materially from the current draft and says most affected facilities resemble term loans.
Regulatory and market risks
The draft RBI directions would restrict NBFCs from offering revolving credit, potentially affecting facilities involving loans against securities and supply-chain or channel financing.
Funding and margins
Tata Capital management
The company is increasing repo-linked borrowing and higher-yielding products, expecting margin benefits from the second half of FY27.
Regulatory and market risks
Short-term funding costs have hardened, lower FCNR funding costs have not clearly passed through to NBFCs, and banks could become more aggressive competitors.
- Growth guidance
- 23-25%
- Expected Retail and SME mix
- 85-87% of the portfolio by Q3FY27
- Expected wholesale mix
- 13-15% by Q3FY27
- Flexi or revolving exposure
- About 8-9% of the overall book
- True revolving exposure
- Less than 5% of the flexi or revolving exposure
- Floating-rate assets
- About 66% of assets
- Credit-cost guidance
- Below 1%, with a potential 5-10 basis-point increase
- Analyst view
- Seven of eight Bloomberg-polled analysts were bullish and one was neutral