Moratorium to strain NBFC liquidity even further, bad debts to rise

These firms operate with very little short-term liquidity, which can become even more strained as customers start defaulting even after the moratorium

The three-month moratorium for customers will likely cause a lot of hardship for non-banking financial companies (NBFC) as these firms operate with very little short-term liquidity, which can become more strained as customers start defaulting even after the moratorium.
 

Rating agency Moody’s noted that the moratorium would create a “significant drain on near-term liquidity” at non-banking financial institutions (NBFIs). Most NBFCs or NBFIs do not have substantial on-balance sheet liquidity because they primarily manage liquidity by matching cash inflows from loan repayments by customers with cash outflows to repay their liabilities, and “moratoriums on loan repayments will result in substantial