An overhang of liquidity crunch persists for small and mid NBFCs, HP Singh of Satin Creditcare told CNBC-TV18 on Tuesday.
“We are seeing liquidity coming in easily for us but for smaller MFIs, there is a challenge in terms of raising funds and that might lead to degrowth, that might also lead to a slight credit asset quality mismatch in the next quarter or so,” he said.
Singh along with Suyash Choudhary, head-fixed income at IDFC MF and Ramesh Iyer, VC & MD of Mahindra & Mahindra Financial Services discussed interest rate market and whether it’s impacting NBFC space.
Choudhary said the excess supply of bonds is a problem in India. He further added that bond rates remain on the higher side despite 2 years of sub-4 percent CPI inflation.
Talking about NBFCs, Choudhary said, “... the incremental cost of money for many of these entities has probably increased by 200-250 basis points and availability of money outside of securitisation route of the balance sheet has shrunk which means that business models going ahead will have to be tweaked.”
“There may be some issues with respect to asset quality which will surface over a period of time,” he added.
On the business front, Iyer said, “We have been fortunate with multi-product approach and deeper penetration and pre-owned vehicle, I think our growth rates - we believe are still attractive.”