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Non-bank financial corporations can not benefit from portfolio redemptions by banks. Instead, "help" could simply worsen their growth prospects, said a representative of the nonbank financial sector.
"Banks buying NBFC portfolios can provide immediate cash, but this is not the desired solution as this will only reduce the size of the NBFC portfolio. long-term form of refinancing, "said Raman Aggarwal, chairman of the Finance Industry Development Council (IFCD), a self-regulatory organization of the NBFC.
For the time being, most banks, including the State Bank of India (SBI)) secured their support by being willing to buy more portfolios from NBFCs to solve their liquidity problems.SBI said it has the opportunity to buy up to 45,000 crores of rupees (including including his previous plan to purchase 15,000 rupee crores.]
Although most banks said they did not have any major concerns and continue to lend to the NBFC sector, many of them they see in the situation an opportunity to develop their own market share, now having better pricing power.
The NBFC organization also wrote to the government and the RBI in this regard and has received badurances of its support, but has not yet heard of formally speaking of two institutions.
In addition to liquidity issues, the NBFC is currently grappling with concerns over the recovery of cash flow from its business. Some banks have also withdrawn their already approved limits to limit additional financing, fearing to be defaulting.
This comes at a time when about 2 million crowns of non-bank lenders' debt have to be repaid or postponed. According to the Department of Economic Affairs (DEA), at the end of December 2018.
In a letter of October 26, the department expressed the fear of a "significant defect" on the part of large NBFCs and Housing Finance Companies (HFCs) in the next six weeks if no additional liquidity support is provided.
The ministry estimates a funding gap of a crore of 1 RS lakh by the end of the year if the pace of fundraising observed in the first half of October. (approximately
Another crore of 2.7 million rupees of commercial paper and non-convertible debentures will have to be repurchased between January and March 2019, the letter says. [19659002] Mudr's push
Aggarwal stated that it was necessary for the Mudra program (micro-unit development and refinancing agency) to actively support the refinancing of small and medium-sized NBFCs for which refinancing is the only mode of financing.
Mudra's exposure to NBFCs is negligible and the finance minister had badured in his budget speech this year that the standards for refinancing by the NBFCs of Mudra would be redefined. This is the shouting need of the hour for r a large number of small and medium NBFCs, "he said.
A typical NBFC model is the short-term loan, with an average of 2 to 4 years with a small note loaned to a small business.
According to Edelweiss and CIFAR reports, more than 31,000 crore of commercial paper were used during the first three days of November. Of these, nearly 16,000 crores of rupees were traded on Monday, including 1,075 crore paper from Dewan Housing Finance Corporation (DHFL).
NBFCs (including HFCs) accounted for about 55-60% of bond issues in the last 2 years. -3 years and about 41% of outstanding PCs as of September 30, 2018, says another report from ICRA.
Fears of default are followed by the first failure of the non-banking infrastructure conglomerate IL & FS (Leasing and Financial Services). it happened in early September.
Aggarwal said that it was very important not to badociate NBFCs with housing finance companies (HFCs). "The whole issue of badet-liability mismatches could be relevant for long-term financing actors such as HFCs," he said.
Fears were also expressed in Delhi.
Secretary of General Affairs, Injeti Srinivas, met with reporters On November 5, he said, "This is essentially a segment of NBFCs and HFCs that are facing liquidity problems. It's more pronounced there. I will not go into individual names. It's a segmental problem. These are big entities that are part of this segment.
In addition, a lower rupee and a higher oil price have aggravated the repayment capacity of non-bank lenders.
"At the macro level, some measures have been taken. This situation should be mitigated, but at the same time … the way in which companies in this sector conduct their activities will have to be deeply introspective and adopt a sustainable model, taking into account the sources of financing. and deploying them to minimize this lag. Srinivas added.
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