It may appear that NBFCs are reading the tea leaves right on funding
In some cases, exposure is as high as 12% of the fund's corpus; a few investments are also in AA rated papers that are relatively less liquid
The report said liquidity tightness could lead to sharply higher financing costs for NBFIs
Says liquidity tightness might lead to sharply higher financing costs, or even difficulty in rolling over their liabilities
Don't throw the baby out with the bath water
Income-Tax department examining data received from RBI, FIU to check potential tax evasion
DHFL, JM Financial, Edelweiss Financial, Centrum Capital, Repco Home Finance, Reliance Home Finance, Aditya Birla Money and Indiabulls Ventures were down 5% to 11% on the BSE.
Bank lending to NBFCs has grown by 44% , year on year, from Rs 3.4 trn as of August 2017 to Rs 4.9 trn as of August this year
Firms with strong parent support, high asset re-pricing ability are better placed
Reliance Home Finance, Central Bank of India, Repco Home Finance, Cholamandalam Investment and Ujjivan Financial Services were down in the range of 5% to 15% on the NSE.
Seeking to calm the nerves of worried investors, Finance Minister Arun Jaitley said Monday that the government would take all measures to ensure adequate liquidity for non-banking financial companies (NBFCs) and mutual funds. The minister's remarks come in the wake of stock markets witnessing sudden and stiff fall in intra-day trade on Friday over concerns of liquidity crisis being faced by some of the NBFCs. "The Government will take all measures to ensure that adequate liquidity is maintained/provided to the NBFCs, the mutual funds and the SMEs," Jaitley tweeted ahead of the opening of stock markets. The Reserve Bank of India (RBI) and market regulator Sebi said on Sunday that they were closely monitoring the developments in the financial sector and were ready to take "appropriate actions" to calm the jittery investors. There are liquidity concerns following default in repayment of loans by diversified IL&FS group. Another housing finance company, DHFL, too is reportedly facing .
Analysts say the ongoing crisis at IL&FS created a panic and triggered the sell-off in these stocks
Rs 34-bn net worth already impacted, shows analysis of 10 most valuable firms
Fund managers such as ASK Group and Nisus Finance have set up or are setting up realty-focused NBFCs, to lend to the sector
Listed retail NBFCs reported a combined net profit of Rs 108 billion during the January-March quarter, compared to private sector banks' net profit of Rs 72.9 billion
These instruments should not constitute more than 15-20% of your debt portfolio
As most of public sector banks and some private banks are grappling with bad loans for last many years, it has generated a tremendous opportunity for NBFCs to ramp up its scale
Finance companies in India are expected to see an 18 per compounded annual growth rate (CAGR) for the next two and a half years and raise their share in total credit to 19 per cent by 2020, according to rating agency CRISIL.In 2017, non-bank finance companies (NBFCs) increased their share in the total credit market to 16 per cent, from 13 per cent in 2015. The share of public sector banks (PSBs) reduced to 51 per cent, from 57 per cent in 2015. CRISIL says PSBs will see a further shrinking of their share to 47 per cent by 2020 as they battle with capital constraints. NBFCs replicating traditional banking services with innovative products and delivery systems would also chip away at PSBs' share.The home loans segment, largest business segment for NBFCs, is expected to grow at a steady CAGR of 18 per cent over the next three years as they focus on self-employed customers and lower ticket size. NBFCs are also set to increase their market share in the wholesale finance business from 12 ...
The sector is also witnessing some pressure in its asset quality as economy contracts
If you have an active trading account or a consumer loan, consider investing in NBFCs