Repairing NBFCs

RBI can't allow liquidity crisis to lead to solvency issues for the sector

Recently released data from the Finance Industry Development Council (FIDC) delineates the extent of the slowdown in the non-banking finance companies (NBFC). According to the data, when housing finance companies were excluded, the quantity of loans sanctioned by NBFCs fell by 31 per cent year-on-year in the fourth quarter of 2018-19, between January and March of this year. This came after a 17 per cent year-on-year decline in the third quarter of the same financial year, between October and December of 2018. This was the period in which defaults by entities associated with Infrastructure Leasing and Financial Services or IL&FS,