Bridge NBFC-bank divide, get credit to flow

24 May

Bridge NBFC-bank divide, get credit to flow

Non-banking finance companies (NBFCs), which have helped credit reach last-mile borrowers, would likely be priority for the new administration that needs to ease access to funds for NBFCs so that India’s consumption demand and financial stability remain unaffected.

The sector has faced a credit squeeze ever since IL&FS and its units defaulted on repayment commitments, the strain being visible in the latest monthly sales charts of cars, two-wheelers and trucks.

Over-leveraging, excessive concentration, and massive mismatch between assets and liabilities have exacerbated problems for a sector that has otherwise been at the vanguard of taking formal financing to homes that remain unbanked. The sector constitutes about 15% of the balance sheet of the formal banking sector

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