Non-banking finance companies are lending more to the healthcare segment. The rising level of health consciousness among Indians, cost of healthcare and India's reputation as a global hub for medical tourism are the some of the reasons for the growth in this segment.
While some NBFCS are setting up dedicated verticals for the healthcare segment, some are tying up with medical equipment manufacturers to offer financing.
Until now only banks were lending to this sector. But now, captive NBFCs, and other lenders are tapping this need.
As medical costs in India are about 25 per cent cheaper than developed counties, medical tourism is seeing huge growth. The number of medical tourists in India has seen an increase from about one lakh to five lakh in the last three years. This has also driven private healthcare providers to upgrade their medical technology infrastructure and matching it with world class facilities, said NBFC officials.The growing awareness about medical insurance is also contributing to the growth in the healthcare industry.
These include loans for purchasing and importing medical equipment as well as loans for construction and expansion of hospital buildings.
“Healthcare facilities in India are under-penetrated and there is not much government funding. With new diseases being discovered, there is inherent demand for healthcare facilities. Therefore, there is need for the commercial and private sector to lend to this segment,'' said Mr K V Srinivasan, Chief Executive Officer, Reliance Commercial Finance, whose loans to the healthcare segment accounted for Rs 433 crore as on March 2011. As a proportion of the small and medium enterprises segment, it is about 14 per cent, up from 7 per cent in 2008-09.
The healthcare portfolio is likely to touch Rs 500-600 crore by March 2013, Mr Srinivasan said.
Reliance gives loans to hospitals for buildings as well as asset financing loans for medical equipment.
Substantial requirement
Siemens Financial Services, the NBFC arm of Siemens AG, which started operations in May 2011, has financed 50 clients in the healthcare space so far, said Mr Sunil Kapoor, CEO, Siemens Financial Services.
Siemens research shows that the Indian healthcare sector would invest up to Rs 13.2 lakh crore between now and 2020, which makes it a very attractive sector for lenders, he added.
With about 70 per cent of the Indian population below 35 years, the future requirement for medical facilities will be substantial, said Mr D K Vyas, CEO of asset financing company, Srei BNP Paribas.
“The unhealthy lifestyle, diet and stress levels are contributing to an increase in illnesses. But the per capita spending on healthcare in India is lower than many other countries. So, the demand for expansion in healthcare segment will be huge,” Mr Vyas said. Srei BNP Paribas, which started operations two years ago, has a separate vertical for medical equipment financing. The market size is estimated to be $750 billion, said Mr Vyas.
“In the last two years we have built up a portfolio of Rs 350 odd crore and it is growing fast. We expect it to be 7-8 per cent of our assets under management within three years,'' he added. The total AUM currently is Rs 15,000 crore.
The company is also the preferred lender for medical equipment manufacturer Wipro GE Healthcare.
“We will look at offering total solutions. While we may not be able to fund the buildings, we can fund the beds as they will form part of medical equipment,” he said.