INSUBCONTINENT EXCLUSIVE:
MUMBAI: A prolonged liquidity tightness for non-banking finance companies (NBFCs) could impact their credit standings and adversely impact
lead to sharply higher financing costs for NBFCs, or even difficulty in rolling over their liabilities, because of the heavy reliance of
management practices of Indian NBFIs
In particular, these companies have very little backup liquidity and their liquidity management mainly involves matching their short-term
likely to spill over to the broader economy as these companies have increased their loan exposure at a faster rate than the banking system
forced to curtail lending activities
This will constrict credit supply to sectors where these companies have been most active and have enjoyed large market shares in lending
These sectors include retail lending segments such as housing and LAP, as well as commercial real estate and lending to real estate
March 2016, with a strong growth in short term borrowings like commercial papers
one-month period, after which this ability will weaken considerably
Indian NBFCs have little excess liquidity on their balance sheets, and manage their liquidity almost solely through matching the maturities
