Asset quality of NBFCs may deteriorate further: Financial stability report

The latest issue of financial stability report (FSR) by the Reserve Bank of India (RBI) says asset quality of non-banking financial companies (NBFCs) is expected to deteriorate further due to business disruptions caused by the Covid-19 pandemic, especially in the industry sector, one of the major recipients of NBFC credit.

The sector is recovering from the shocks of failure of a few large entities. While credit extended by them has fallen substantially, the sector has seen an increase in bad loans ratio, too. 

A system-level stress test for the sector credit risk with a sample of 200 NBFCs, having an asset size