Icra Asks Nbfcs To Be Wary Of High Debts

"Ideally speaking, one must not depend too much on debt. As a rating agency, we feel that once the ratio touches 6:1, it is dangerous for the company," Icra managing director P K Chowdhury said. He was addressing the members of Equipment Leasing Association (ELA) yesterday.

He defended the concept of equity grading that Icra intends to introduce.

"Both Standard and Poors (S&P) and Moody's are into equity ranking overseas, but they do it for the secondary market not the primary market.

Here we are trying to introduce it in the primary market," Chowdhury added.

He underscored the need for NBFCs to concentrate on management quality and sustainability of income in the new competitive scenario.

 

"As a company policy, NBFCs should not rush to attain a AAA from a rating agency as we regard that risks are inherent in NBFC business," Chowdhury said.

Speaking earlier on the occasion, ELA chairman Atul Nishar welcomed RBI's decision to free the interest rates on deposits.

"We have asked the central bank to cut our SLR requirements to 10 per cent," he said.