NBFI recovery unlikely in near-term: Fitch Ratings

NEW DELHI: Fitch Ratings said recovery of non-banking financial institutions (NBFIs) in near-term is not probable as the sector continues to wrestle with the fallout from the COVID-19 pandemic.

"We believe the significant economic disruption and prevailing uncertainty caused by the pandemic will impede a return to a more normal operating environment for NBFIs, with consequences for new loan disbursements, asset quality and provisioning, sector profitability, and funding conditions," Fitch said.

It said uncertainty would stem from depressed consumer demand and a sustained high level of coronavirus infections, notwithstanding a gradual economic reopening that has improved collections and funding availability since June 2020.

"A near-term recovery for India's non-bank financial institutions (NBFI) is not probable, as the sector continues to wrestle with the fallout from the coronavirus pandemic," it said.

The sector is nearly two years into its crisis, triggered by the default of IL&FS; nearly 40% of investors polled still expect it to take another two years before a recovery is evident.