NBFCs see no sign of liquidity crisis easing, await RBI's rescue act

The recent rating downgrade of Reliance Home Finance has cast fresh doubt on the NBFC segment

The liquidity crunch in non-banking financial companies (NBFCs) is showing no signs of easing, forcing the firms to sell their good assets just to keep afloat, and use their existing cash flows to lend, rather than raising fresh resources for expansion.

The Reserve Bank of India (RBI) on Thursday told NBFCs with asset size of Rs 5,000 crore and above to appoint a chief risk officer. The NBFCs maintain that they have been submitting their asset-liability report every quarter to the central bank, but the RBI hardly raised any objection about the mismatch.

About half of the funding in the sector used