Page 36 - Nbfcs

Budget: Govt proposes credit guarantee on debt in crisis-hit NBFCs, HFCs

The government has proposed to provide credit guarantee for the NBFC sector that has been facing liquidity crisis since the burst of the IL&FS scam nearly one-and-a-half years ago. Besides, the asset-wise eligibility criterion to be admitted under the debt recovery process has been reduced, according to Budget documents. To address the liquidity constraints of non-banking financial companies (NBFCs) and housing finance companies (HFCs), the government proposed to set up a partial credit guarantee scheme for the sector after the Union Budget 2019-20. "To further this support of providing liquidity, a mechanism would be devised. The government will offer support by guaranteeing securities so floated," the Budget documents said. Pawan Singh, managing director and CEO, PTC India Financial Services, said, "The announcement of the government's intent to guarantee securities floated to provide liquidity for NBFCs is expected to help in tiding over the current liquidity crunch." The ...

Budget proposal allowing NBFC invoice financing will help MSMEs: Trade body

MSME Export Promotion Council Chairman D S Rawat said government should make it applicable to all units operating from conforming as well as non-conforming areas

Budget 2020: Govt may introduce programme to buy NBFCs' stressed assets

The government is likely to unveil, in the Union Budget 2020, a Troubled Assets Relief Programme (TARP) similar to what the US initiated during the financial crisis in 2008

Economic Survey launches 'Health Score' to detect liquidity issues in NBFCs

The Economic Survey on Friday unveiled an early-warning system, 'Health Score', that could read signs of impending rollover risk problems in the non-banking finance sector. The IL&FS crisis following debt defaults in 2018 had led to a contagion in the domestic non-banking financial company (NBFCs) sector. The 'Health Score', developed for NBFC and housing finance company (HFCs) sectors, can help detect early-warning signals of impending liquidity problems facing the companies in the sectors. The Survey, presented in Parliament by Finance Minister Nirmala Sitharaman on Friday, said the Health Score could be used to provide early warning signals of impending rollover risk problems in the NBFC sector and help set prudential threshold of permitted funding to the sector. A sudden payment default without any prior warning by Infrastructure Leasing and Financial Services (IL&FS) in August 2018 had triggered panic and caused liquidity crisis in the NBFC sector. Quoting the recent ...

Budget 2020: NBFCs seek setting up of permanent refinance window for sector

Non-banking finance companies (NBFCs) have sought setting up of a permanent refinance window for the sector in the Union Budget, which they say will help them diversify their funding sources. The shadow banking players have also asked for allowing NBFCs with strong support from their parents to access public deposits. Finance Minister Nirmala Sitharaman is scheduled to present the Budget for financial year 2020-21 on February 1. Banks have been reluctant to lend to the NBFC sector after a series of default by Infrastructure Leasing and Financial Services (IL&FS) in September 2018. This risk averse approach of banks created a liquidity crunch for the entire NBFC sector which in turn had a multiplier effect on the important sector like automobiles, micro, small and medium enterprises (MSMEs) and consumer goods. "The need of the hour is to develop funding sources for NBFCs outside the banking system. A dedicated refinance window for NBFCs, has been a long-standing demand of the NBFC

Sebi diktat hits commercial papers; traded volume slips to Rs 34,659 crore

Experts say the Sebi rule has played a part but it is also a reflection of the funding crisis that NBFCs are going through.

After Sebi tightens norms, shadow banks' shares in loan against shares jump

Market participants say that yields on LAS have turned attractive, with other investors steering clear of this segment and the risk-premium kicking-in amid concerns around this segment

PFC lists $750 million bonds at NSE IFSC; increases foreign borrowing

Looking at resolving 4 more stressed power assets this fiscal

Budget 2020: Prakash Javadekar hints at 'action plan' for economic revival

Markets to open for regular trading on February 1

GDP to grow by 5.5% in FY21 but downside risks persists: India Ratings

The government has announced a slew of measures recently to prop-up the economy, but Ind-Ra believes they will come to aid only in the medium term

To enhance liquidity for NBFCs, HFCs, CII suggests easing of certain norms

Unlike banks, it said these types of companies do not have the repo window facility to borrow in times of need

RBI should act as lender of last resort, provide liquidity to NBFCs: SBI

With difficulties in NBFC sector continuing, economists at SBI on Friday pitched for the Reserve Bank to play its role as the lender of last resort, something the central bank has avoided since the start of troubles in 2018. In its report on Budget expectations, the economists said RBI should "seriously think" of providing liquidity to non-banking financial companies (NBFCs) against the assets held by the lenders. "Given the crisis of confidence in the financial markets, it is imperative that central banks don't forget their primary function of being the lender of the last resort," they said. The NBFC sector has been impacted since August 2018 after the collapse of infrastructure lender IL&FS. So far, RBI has refused to play its role as the lender of last resort, terming the problem at select NBFCs as one created because of asset-liability mismatches, where entities depended on short-term liabilities to fund long-term assets and found the going difficult with hike in rates. A slew

Market borrowing rate must come down: Assocham president B K Goenka

Goenka said while the RBI has reduced the repo rate, banks have not cut their lending rates. They are not reducing it because of the input cost-output cost difference

NBFCs' asset quality deteriorates, delinquency rate rises by 50 bps in Q3

In the consumer credit segment, delinquencies have gone down in automobile loans by 22 bps and in personal loans by 5 bps

Kotak Investment Advisors unlikely to bid for Altico Capital India

Real-estate focused Altico's restructuring and sale process comes as the broader shadow-bank crisis drags on, hurting the property sector and the economy

Rate woes of renewable energy firms may stress NBFC books further: Icra

Infrastructure finance companies might have to brace for additional pressure on asset quality from exposure to renewable energy (RE) projects, which face rate risks. These non-bank finance companies (NBFCs) are already affected by the slow resolution of their stressed thermal energy assets, according to rating agency ICRA. The segment's total exposure to the RE segment was pegged at Rs 90,000 crore at end-September. The trajectory of total infrastructure credit in India (from banks and infra NBFCs) had flattened in the six months ended September 2019, the first half (or H1) of financial year 2019-20. hile infrastructure credit grew 19 per cent in 2018-19, to Rs 21.1 trillion, it rose only marginally to Rs 21.2 trillion in H1 of 2019-20.The uncertainty regarding rates in some southern states has led to rating downgrades for power companies that have raised money from lenders. The ratio of the number of upgrades to the number of downgrades in the power sector declined to less than one ..

NBFCs to see better loan growth in FY21: Tata Capital CEO Rajiv Sabharwal

Foreign money is coming into the market and because of stability in rupee the hedging cost is also lower

Five-point agenda for NBFCs to create a sustainable business model

Non-banking financial companies (NBFCs) continued to contribute significantly to the economy

The co-lending model of NBFCs & banks may reshape credit delivery. Will it?

A problem which is now being worked upon is to how to marry the low cost of funds from banks with the lower cost of operations of NBFCs and pass this on to borrowers through a blended rate

Expecting better liquidity, NBFCs hope to come out of dark tunnel in 2020

The crippled non-banking financial companies are hoping for better days in the New Year as they expect liquidity condition to improve on the back of various measures announced by the government and the Reserve Bank. Asset quality pressures, liquidity squeeze, asset-liability mismatches, higher borrowing costs, rising defaults levels and rating downgrades made 2019 a tumultuous year for NBFCs or the shadow banks. Having badly lost a year and more since the industry major IL&FS went belly up in September 2018, NBFCs expect that the fiscal and monetary measures will help them come out of the deep tunnel, and to regain their lost importance in the financial system as they have been the key financial intermediaries delivering the last mile credit to the needy all these while. "The outlook is positive as the government and the RBI have already announced a lot of measures to help the NBFC sector," says Shriram Transport Finance Managing Director Umesh Revankar. To alleviate the stress in