Overseas players have set their eyes on the non-banking finance companies (NBFCs) to enter the Indian market even as the Reserve Bank of India (RBI) has restricted the entry of foreign players in the banking space till April 2008.

The latest to take this route is private equity firm Newbridge Capital which recently announced investment of $100 million in the used-truck financing business in India by picking up 49 per cent stake in Shriram Holdings (Madras) Pvt Ltd. Prior to this, another Chennai-based NBFC, Cholamandalam Investment & Finance Company, sold 37.5 per cent stake to the Singapore-based DBS at Rs 228 crore.

Early this year, Shriram Investments Ltd., Shriram Transport Finance Company Ltd and Shriram Overseas Finance Ltd offered 20.6 per cent each to a Mauritius-based private equity fund for about Rs 100 crore through a preferential issue.

Analysts said more such deals would be struck leading to consolidation in the industry. In fact, this the second phase of consolidation in the NBFC sector after the domestic players witnessed a spate of mergers and amalgamations. Ashok Leyland Finance was merged with IndusInd Bank to increase the bank’s retail assets.

Tata Finance, the NBFC arm of the Tata Group, has been merged with Tata Motors while Sundaram Finance has merged itself with Lakshmi General Motors to increase its asset base. Shriram group plans to merge two of its companies, Shriram Transport Finance and Shriram Investments, by the end of this year.

( www.business-standard.com)