Nov 24, 1999|
Tata Finance in Badla foray
Tata Finance Limited (TFL) has finalised plans to enter badla (carry forward) financing in a focussed manner. This has been reported by a leading national daily.
TFL has a presence in the badla market with an exposure of Rs 800 m and plans to enhance this to Rs 5 bn in the coming year. The badla market offers attractive annualised yields of 21-22%. Moreover, with increased dematerialisation of shares and the improved risk control measures introduced by the stock exchanges, the financial intermediaries have been provided with an opportunity to control overall risk of operating in the badla market.
The decision to enter the badla market will provide the company to earn higher returns while controlling risk at the same time. However, it is likely that the returns in this business will gyrate with the sentiments of the market, thus increasing the volatility of earnings. Also, the prospects of a buoyant badla market may need to be reconsidered once rolling settlements, futures and options trading and daily badla financing are introduced in the markets.
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