How not to waste the NBFC crisis

The main lesson from this crisis is the role of mutual funds and credit rating agencies, which offered the highest rating to junk paper

Over the last nine months, a few non-banking financial companies (NBFCs) like Dewan Housing and Finance (DHFL), Infrastructure Leasing & Financial Services (IL&FS) and those of the Anil Ambani group are unravelling like a slow train wreck. This has caused enormous turbulence in the financial sector and in a small segment of the stock market. Additionally, banks and mutual funds are feeling the heat because they have lent to these troubled finance companies. How bad is the crisis and what are the lessons from it? The first thing we know, unsurprisingly, is that public sector banks (PSBs) are at the