The Reserve Bank of India (RBI) directing NBFCs to adopt better risk monitoring tools and maintain a liquidity buffer would help elevate the industry's image in the minds of the investors, believes Mahindra & Mahindra Financial Services.
“We have been practising some sort of liquidity coverage ratio for the next month outgoings, probably not in such well-structured manner but certainly portion of the following 30-days cash outflow on a rollover basis, on a constant basis is being provided in terms of immediately liquidity securities in any good company,” said Ravi in an interview with CNBC-TV18.
When asked if they would have to incur any costs for rolling out these guidelines, he said, “Compliance cost would be between 35-40 and 70-75 basis points depending on the rating of the company. The lower the rating of the company, the higher would be the compliance cost.”
On the earnings front, he said traditionally Q3 and Q4, for rural-based companies, have always been better and the current festive season was good for the automobiles.
“Things are picking up, with good monsoon and with revision in MSP, the rural cash flow is expected to be stronger in Q3 and Q4,” said Ravi.