Top 50 NBFCs need `70K cr in Nov.

Mumbai, Nov. 8: As top 50 non-banking finance companies need `95,000 crore to repay debts, of which `70,000 crore are commercial papers maturing this month, and banks will have to lend more to the sector to avoid defaults, says a report.

Since the IL&FS defaults, it can be noted that NBFCs and housing finance companies (HFCs) were facing a crisis of confidence, sending call money rates higher and overall liquidity tight.

This forced RBI to open a special window for banks but denied the same to NBFCs.

The crisis of confidence comes even as asset quality of NBFCs is largely steady.

“As many as 50 large NBFCs have debt repayments worth `95,000 crore due in November, of which, `70,000 crore are commercial papers (CPs) maturing,” said Krishnan Sitaraman, a senior director at CRISIL, adding some of them are well-placed to meet the debt repayments without drawing down on bank lines, others may have to do so, at least partially.

The report, however, did not say how much of shorttenor debt is due this month at the industry level. In October, the rollover rate of CPs issued by these 50 largest NBFCs was only around 40 per cent of the average monthly issuances between June and August 2018. Consequently, NBFCs were forced to tap banks for funds.

According to a DBS report, the on-going crisis of confidence in non-banking financial companies (NBFCs) may prove to be a drag on economic growth, as balance sheet constraints and higher funding costs may prompt these shadow banks to slowdown lending.

But this will come as a growth booster for banks, which for long have been ceding credit market share to NBFCs, which had accounted for 12-15 per cent of the total credit generated in the past two fiscals.

— PTI