Non-banking financial companies (NBFCs) continue to shun public deposits and instead are relying more on bank finance, the economic survey has said.

“Continuing the trend of the previous year, public deposits held by all groups of NBFCs taken together declined moderately during 2008-09. This trend is indicative of the shift in preference of NBFCs from public deposits to bank loans/debentures,” the suvey said. The overall public deposits recorded a decline to Rs 21,548 crore during March 2009 from Rs 24,400 crore last year. The survey says that the decline in public deposits was mainly evident in the case of loan companies and equipment-leasing companies due to reclassification of some of these asset finance companies.

Raman Aggarwal, co-chairman, Finance Industry Development Council, said that the reliance on public deposits by NBFCs is due to regulatory push. “This is purely regulation driven as the RBI has been constantly discouraging public deposits. The banking regulator has not revised deposit acceptance limits since 1998,” he said.