Nine NBFCs may fall below minimum capital requirement in baseline scenario

The baseline scenario is projected for one year ahead, based on assumptions of business continuing under usual conditions

As many as nine non-banking finance companies (NBFCs) from a sample of 152 could see their capital adequacy ratio fall below the regulatory minimum requirement, under the baseline scenario of Reserve Bank of India’s (RBI) stress testing, where it assesses the resilience of the sector to credit shocks, the financial stability report of central bank revealed.

The tests were carried out under a baseline and two stress scenarios – medium and high risk, with an increase in slippage ratio by 1 standard deviation (SD) and 2 SDs, respectively, RBI said. The baseline scenario is projected for one year ahead, based