INSUBCONTINENT EXCLUSIVE:
in the non-banking financial companies (NBFCs) sector as misadventures by some large entities and credit squeeze present a perfect recipe
for disaster, a senior government official has said
In recent months, the country's financial system has been grappling with multiple woes in the wake of the turmoil at diversified ILFS
group as well as debt defaults by some other large entities
In an interview to PTI, Corporate Affairs Secretary Injeti Srinivas said the NBFC sector is facing issues of credit squeeze, over-leveraging
and misadventures by some large entities."There is an imminent crisis in the NBFC sector
There is a credit squeeze, over-leveraging, excessive concentration, massive mismatch between assets and liabilities, coupled with some
misadventures by some very large entities, which is a perfect recipe for disaster," Mr Srinivas said
However, he added that "responsible" companies are managing the risk well and are not facing such a dire situation.Mr Srinivas also said
corporate governance in India is being put to test
The way things are moving, in the medium to long term it will be for the good
In the short term, there can be turbulence," he said."If you are responsible, you manage the risks
There are many companies in the country that have strong corporate governance
They take risks but manage them as well
So, they don't face such dire situation that some others are facing today," Mr Srinivas said
Amid instances of the situation of non-performing assets (NPAs) being linked to external factors, Mr Srinivas noted that it would not be a
convincing explanation."To say that the situation (NPA) can be attributed entirely to external factors and business risks is not a
convincing answer because there is something known as responsible behaviour," he emphasised.Earlier this month, former Prime Minister
Manmohan Singh said the banking sector is "under severe stress" and the way out of "this mess" is to reverse some "gross distortions", work
brought lending to a virtual halt, the former prime minister had said, adding that a "one-size-fits-all approach" drove companies into
insolvency while demonetisation shut out all sources of informal credit.However, Finance Minister Arun Jaitley had dismissed the concerns,
saying, "When an economist turns into a politician, he loses sense of both economy and politics"
"Dr Manmohan Singh left behind in 2014 an economic slowdown, policy paralysis and corruption
He brought down his party to lowest ever strength in Parliament
India was a part of the fragile five
Today he regards the world's the fastest growing major economy as disastrous," Mr Jaitley had said.Get the latest election news, live
updates and election schedule for Lok Sabha Elections 2019 on TheIndianSubcontinent.com/elections
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Election results will be out on May 23.
