More thoughts on the NBFC crisis

Resolving this crisis of confidence requires either more granular information or getting independent confirmation of asset quality

It has been two months since Infrastructure Leasing and Financial Services (IL&FS) first defaulted on its debt-market obligations. That default has thrown debt and money markets into turmoil and created a mini panic on some NBFCs (non banking financial companies), including housing finance companies. It has been a very tough period for NBFC stocks in particular and the equity markets in general.

What have we learned in the past two months? What is the way forward?

Firstly, the government superseding the board of IL&FS was probably the right response and it did manage to calm the situation. It gave IL&FS