Fitch Rate: Asset Quality Risk

Non-banking finance companies face renewed asset quality and liquidity risks amid a second wave of COVID-19, Fitch Ratings said on Thursday. These challenges are likely to increase if recent restrictions to contain the pandemic are expanded or prolonged, leading to greater economic and operational disruption, it added.

The rating agency further said that an increase in the rate of infections and broadening of social distancing restrictions pose downside risks to its 12.8 per cent growth projection for the current fiscal. “India’s non-bank financial institutions face renewed asset quality and liquidity risks amid a second wave of coronavirus infections,” .

It said a key COVID hotspot is Maharashtra, the state with the largest economic contribution in India at 13-14 per cent of the national GDP. Meanwhile, the extension of the Emergency Credit Line Guarantee Scheme for SMEs till June 2021, will offer such borrowers further breathing room. Fitch will review ratings of NBFIs if more severe restrictions that have greater operational repercussions for rated entities are imposed. Meanwhile, the extension of the Emergency Credit Line Guarantee Scheme for SMEs till June 2021, will offer such borrowers further breathing room.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this:
search previous next tag category expand menu location phone mail time cart zoom edit close