RBI's extension of loan moratorium a credit negative for NBFCs: Moody's

The credit outlook report noted that the Government of India and the Reserve Bank of India have announced a series of measures to alleviate liquidity stress at the NBFCs

The Reserve Bank of India's decision to extend the moratorium on loan repayment by three more months will be credit negative for non-banking finance companies (NBFC), according to a report by Moody's Investors Service.

It said that NBFCs manage their liquidity primarily by matching outflows, mainly debt repayments, with inflows from customer loan repayments. The moratorium on customer loan repayments, initially effective from March 1, has led to a significant decline in cash inflows and has adversely impacted the liquidity of NBFCs.

"The extension of the moratorium will add additional stress to cash inflows, which will continue for at least three more