Economy
Note ban will put pressure on NBFCs for next 6 months: Moody's
Global rating agency Moody's Investors Service on Tuesday said that as a fall-out of demonetisation, the Non-Banking Financial Companies (NBFCs) will come under pressure for the next six months.
 
"NBFCs in India will demonstrate broadly stable asset quality, but delinquencies will likely rise over the next one-two quarters, as demonetisation adversely affects collections across asset classes," Moody's Investors Service said in its latest report released here.
 
"It will add to the short-term adjustment pressure on India's non-bank finance companies, but will not derail their growing franchise," Moody's added. 
 
The report is titled 'Indian Non-Bank Finance Companies (NBFCs): Balancing Strong Growth with Rising Risks'.
 
Over the past three years, the NBFCs have gained some market share in the origination of retail lending, on the back of the faster growth exhibited by such entities when compared to the banks. 
 
This is particularly the case when compared to public sector banks, which face significant challenges on their asset quality and overall solvency profiles.
 
"Nevertheless, we expect that competitive pressures from the banking sector will remain intense as banks are increasing targeting of the retail segment to offset weakness in their corporate lending," Alka Anbarasu, Moody's Vice President and Senior Analyst, said. 
 
"In addition, retail lending, particularly housing loans, is more capital efficient for the banks," Anbarasu added.
 
On funding, Moody's said that it expects that the NBFCs' funding profiles would broadly remain stable.
 
"The NBFCs' profitability and capital, as well as funding and liquidity levels, will stay broadly stable," it said.
 
Moody's conclusion is despite the fact that -- in line with the global trend -- the funding and liquidity profiles of Indian NBFCs present key downside risks, particularly because of their dependence on confidence-sensitive market funding.
 
Moody's said that the NBFCs will maintain well-matched asset-liability profiles -- despite their weak funding profiles -- a situation which will protect them against downside risks. 
 
"However, adverse market events have exposed them to volatility in refinancing and remain a key credit challenge," it said.
 
The NBFCs are growing at a fast pace, and have gained market share in the origination of retail credit.
 
"The performance of individual NBFCs varies widely, even as the sector as a whole shows better performance when compared to the banks. In addition, within segments -- such as for housing finance companies -- variation is also widespread, reflecting the nature of portfolios, as well as the ability to manage costs," the report said.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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SC questions government over demonetised currency
The Supreme Court on Tuesday asked the government why it did not exercise the legal option of letting people deposit the demonetised currency beyond December 31.
 
Asking the government to explain why such a window was not given to those who could not adhere to the December 31 deadline, Chief Justice Jagdish Singh Khehar, Justice D.Y. Chandrachud and Justice Sanjay Kishan Kaul gave it two weeks time to file an affidavit.
 
"Why did you not exercise the option of opening another window (provided under law). You may have 20 reasons."
 
The court said this as Attorney General Mukul Rohatgi told the bench that Parliament did give the option to the government but it chose not to exercise it.
 
"I (government) didn't think it appropriate to exercise the option," the Attorney General told the court.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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COMMENTS

Gurudutt Mundkur

5 days ago

Weren't 58 days enough to exchange the demonetised currency? Or did one have to hunt high and low to get to the stashed notes?

Resolve Ayodhya dispute amicably, says SC
The Supreme Court on Tuesday said that the amicable settlement of the Ayodhya Ramjanmabhoomi-Babri Masjid dispute was a better course than on insisting on judicial pronouncement.
 
A bench of Chief Justice Jagdish Singh Khehar, Justice D.Y. Chandrachud and Justice Sanjay Kishan Kaul said this as BJP leader Subramanian Swamy urged it to constitute a bench to hear a batch of petitions challenging a 2010 Allahabad High Court order.
 
The 2010 order said that there should be a partition of the Ayodhya land between the parties to the dispute. 
 
Saying that negotiated settlement between the parties to the dispute was the best course, Chief Justice Khehar offered to act as a mediator provided that he would not hear the matter on the judicial side.
 
Pointing towards Justice Kaul, the Chief Justice said that he too could mediate.
 
Justice Khehar told Swamy: "Any person of your choice. You want me to mediate (but) I will not hear (on judicial side). You want my brother (Judge). There are issues. You all sit together across the table and decide."
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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COMMENTS

Gurudutt Mundkur

5 days ago

May one expect all parties involved to accept the sound advice? Or will some guys sit on their egos?

GLN Prasad

5 days ago

It took 7 years to deliver an advice. Great. If it is possible, then why the parties should come to court ?

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