INSUBCONTINENT EXCLUSIVE:
slew of measures to boost the economy, a JM Financial report has suggested that although the government has been responsive to the issues of
industry, the steps may not be sufficient and more measures might be needed to give a fresh start to the lending cycle of non-banking
financial companies (NBFCs)."In our view, while the specifics matter, it was equally important to note that the government is not turning a
to create a virtuous cycle of demand recovery given that the level of pessimism is extremely high, that more is required to lower the real
estate inventory and to restart the cycle of lending by the NBFCs," said the report on the latest measures announced by Finance Minister
Nirmala Sitharaman.It, however, noted that three important takeaways from the announcements were "some preponement of demand in autos (PVs
from fleets, LCVs) that can help reduce excess inventory in the near-term, faster payment of GST refunds to MSMEs can help address some
sales, the report noted that the auto sector may benefit marginally.The government announced an additional 15 per cent depreciation on all
vehicles acquired during the period from now till March 31, 2020
According to JM Financial, this move is likely to aid clearing of some of the inventory for personal vehicles (PVs) and light commercial
granular retail housing, vehicle finance and MSME loans."The government increased the outlay for Liquidity Infusion Facility refinance
scheme of NHB (National Housing Bank) from Rs 100 billion (10,000 crore) to Rs 300 billion (30,000 crore)
Additionally, public sector banks (PSBs) have been asked to fast-track collaboration with NBFCs for co-origination of loans to MSMEs, small
traders' self-help groups and MFI (micro-finance institutions) client borrowers."Further, we also await the measures to address the pain of
home-buyers where the project is stuck due to lack of funding for the developer
In our view, these steps will benefit granular retail housing, vehicle finance and MSME loans," it said.The report further observed that the
actual requirement is to address the heightened level of risk aversion in the banking sector concerning developer or large 'loans against
property' (LAP) exposures of NBFCs and HFCs
Otherwise, these measures will continue to result in the PSBs increasing their exposure to a couple of well-managed, strong promoter backed
NBFCs and HFCs, it said."They might not increase their exposure to NBFCs and HFCs with significant developer and large-ticket size LAP
portfolios," it added.Get Breaking news, live coverage, and Latest News from India and around the world on TheIndianSubcontinent.com
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