A perilous journey ahead for NBFCs: Cheaper funds, slipping credit profile

Recent measures by govt and RBI will help those issuing bonds. But the need is to cover term loans also, says chief of NBFC lobby group

Non-banking financial companies (NBFC) are now getting access to cheaper cost of funds, but their credit profile is simultaneously slipping. Rating agencies have warned of a huge pile-up in non-performing assets (NPA).

The road has been tricky for NBFCs since the IL&FS crisis in 2018, but the pandemic has worsened the situation altogether, with banks and markets hesitant in providing funds to the sector.

However, measures taken by the RBI — such as targeted long-term repo operations (TLTRO) — have helped ease the liquidity pressure to an extent. The central bank on Wednesday announced operational guidelines for accessing liquidity under a government