A rising default rate coupled with the high cost of funds has dealt a severe blow to non-banking financial companies in the northern region, as almost 50 per cent of them operating as asset finance companies have shut down their business operations in the last three years.

NBFCs, which are considered the backbone of commercial vehicle finance in Punjab, Haryana, Himachal Pradesh and the union territory of Chandigarh, have strongly pitched for coverage under the Securitisation Act 2002 and Debt Recovery Tribunal, like banks, to expedite recovery.

Half the asset finance companies in this region have been forced to close shop in last the three years or so due to rising delinquencies and unsupportive attitude of government in timely realisation of outstanding loans from defaulters,'' Punjab and Haryana Finance Companies Association (PHFCA) secretary-general Alok Sondhi said on Friday.

According to PHFCA, the default rate in NBFCs has risen by five times to 15 per cent against 3 per cent in past 3-4 years. ''The strength of NBFCs in this region has squeezed to 200 from 450 three years ago, as they were finding extremely difficult to carry on finance business due to rising default,'' said an official of PHFCA.