Banks deployed more than 70 per cent money raised through targeted long-term repo (TLTRO) in papers issued by AAA-rated non-banking finance companies (NBFC), defeating the very purpose of the special liquidity operations. The top-rated NBFCs did not need special assistance from the RBI or banks. They had enough access to the debt markets and had a comfortable liquidity position. The whole idea of launching the TLTRO funds, in various batches, was to provide system level liquidity as well as “targeted liquidity to sectors and entities experiencing liquidity constraints and restricted market access.” Clearly, banks did not do it, data released by RBI’s Trend and Progress Report showed.
Non-Banking Financial Companies (NBFCs) are expecting higher credit loss as well as an increase in provision coverage rates, mainly due to the impact of the coronavirus pandemic, according to a study. The study by leading consultancy EY is based on an analysis of the standalone financial statements of 42 NBFCs, including 14 Housing Finance Companies (HFCs), for the year ended March 31, 2020. The companies have reported an increase in Expected Credit Loss (ECL) allowance by 33 per cent and an overall increase in provision coverage rate by 26 per cent as at 31 March 2020 compared to the year ended 31 March 2019 . Further, COVID-19 impact accounted for 19 per cent of the ECL allowance as on March 31 this year.
NBFCs expect higher credit loss on COVID-19 woes, says EY study
Non-Banking Financial Companies (NBFCs) are expecting higher credit loss as well as an increase in provision coverage rates, mainly due to the impact of the coronavirus pandemic
Non-Banking Financial Companies (NBFCs) are expecting higher credit loss as well as an increase in provision coverage rates, mainly due to the impact of the coronavirus pandemic, according to a study.
The study by leading consultancy EY is based on an analysis of the standalone financial statements of 42 NBFCs, including 14 Housing Finance Companies (HFCs), for the year ended March 31, 2020.
The companies have reported an increase in Expected Credit Loss (ECL) allowance by 33 per cent and an overall increase in provision coverage rate by 26 per cent as at 31 March 2020 compared to the year ended 31 March 2019 .