Long shadow of liquidity crunch looms over NBFCs in 2019
Live MintWhat could have been the best year in terms of performance for non-banking financial companies quickly turned sour in just a few weeks in September. Investors have taken note of the impact on business growth and most NBFCs are likely to see modest credit growth, lower than previous expectations, as conserving liquidity and capital will take priority. Housing finance companies could also witness some stress from their developer loans book, growth in loans to infrastructure would slow, but, in contrast, retail-focused non-banks will perform well. Companies that have a big fixed-interest asset book or don’t have the pricing power would find it difficult to pass on the incremental cost of funds to customers,” said ICICI Securities in a note. Nevertheless, NBFCs have put the fear of liquidity crunch behind them, thanks to some measures by the Reserve Bank of India, and banks such as State Bank of India, which agreed to provide liquidity to finance companies by buying their loan portfolios through securitization.