INSUBCONTINENT EXCLUSIVE:
New Delhi: World Bank has cautioned India that credit flow from the non-bank financial companies (NBFC) is expected to linger while growth
will remain subdued at 5 per cent for the current fiscal."In India, where weakness in credit from non-bank financial companies is expected
to linger, growth is projected to slow to 5 per cent in FY 2019/20, which ends March 31 and recover to 5.8 per cent the following fiscal
year", the World Bank said in its January 2020 Global Economic Prospects.The World Bank assessment may have come from the trail of events
where, despite government intervention, credit disbursals by the NBFCs have not taken place satisfactorily to the extent it should be
NBFCs are lifeline of rural demand as much of the Indian economy is informal where taking a bank loan is cumbersome for rural and tier II
city population.Inadequate credit flow from commercial banks and non-banking financial companies (NBFCs) to industry has frequently been
cited as a major constraint to growth.The credit disbursals by the NBFCs have continued to slide despite government measures to boost bank
Loan sanctions fell 34 per cent in the September quarter, a year after the NBFC liquidity crisis that was sparked by the unexpected defaults
at the Infrastructure Leasing - Financial Services (IL-FS).Total NBFC sanctions fell to Rs 1.9 lakh crore at the end of September from Rs
2.9 lakh crore during the same period last year, as per data compiled by the CRIF High Mark credit bureau and the Finance Industry
Development Council (FIDC).The NBFCs play a pivotal role driving last-mile credit reach and the government has been ironing out glitches in
fund flow and cost of funds to non-AAA-rated NBFCs to fix this issue.The bank also painted a gloomy picture for the emerging economies as
well as the advanced economies
As per government estimates India is expected to grow at 5 per cent in FY 20, a 11-year low
The Q2 growth has been just 4.5 per cent.Growth among advanced economies as a group is anticipated to slip to 1.4 per cent in 2020 in part
due to continued softness in manufacturing.Growth in emerging market and developing economies is expected to accelerate this year to 4.1 per
This rebound is not broad-based; instead, it assumes improved performance of a small group of large economies, some of which are emerging
from a period of substantial weakness.About a third of emerging market and developing economies are projected to decelerate this year due to
weaker-than-expected exports and investment."With growth in emerging and developing economies likely to remain slow, policymakers should
seize the opportunity to undertake structural reforms that boost broad-based growth, which is essential to poverty reduction," said World
Bank Group Vice President for Equitable Growth, Finance and Institutions, Ceyla Pazarbasioglu."Steps to improve the business climate, the
rule of law, debt management, and productivity can help achieve sustained growth", the World Bank said.
