Home / Industry / Banking / NBFCs may turn to corporate bond market to fulfill their funding needs

NBFCs may turn to corporate bond market to fulfill their funding needs

NBFCs have the option to raise funds through commercial papers, but overreliance on short-term debt instruments could lead to an asset-liability mismatch

Premium

3 min read Last Updated : Nov 19 2023 | 11:10 PM IST

Listen to This Article

Non-banking financial companies (NBFCs) could turn to corporate bonds to fulfill their funding needs after the Reserve Bank of India (RBI) announced stricter norms for banks and NBFCs in relation to unsecured lending portfolios, market participants said.

As of March this year, NBFCs predominantly relied on bank borrowings, accounting for approximately 41.2 per cent of their total funding, according to a report by S&P Global Ratings.

The central bank has implemented a 25 per cent increase in the risk weight on banks' credit exposure to NBFCs, in addition to the risk weight already linked to the rating of these non-bank

What you get on BS Premium?

Unlock 30+ premium stories daily hand-picked by our editors, across devices on browser and app.
Pick your 5 favourite companies, get a daily email with all news updates on them.
Full access to our intuitive epaper - clip, save, share articles from any device; newspaper archives from 2006.
Preferential invites to Business Standard events.
Curated newsletters on markets, personal finance, policy & politics, start-ups, technology, and more.

VIEW ALL FAQs

Need More Information - write to us at assist@bsmail.in