{"id":14850,"date":"2020-08-14T00:45:18","date_gmt":"2020-08-14T00:45:18","guid":{"rendered":"https:\/\/bengalnewstimes.com\/?p=14850"},"modified":"2020-08-14T00:45:18","modified_gmt":"2020-08-14T00:45:18","slug":"credit-cost-to-more-than-double-for-nbfcs-says-acuite-ratings","status":"publish","type":"post","link":"https:\/\/bengalnewstimes.com\/?p=14850","title":{"rendered":"Credit cost to more than double for NBFCs, says Acuite Ratings"},"content":{"rendered":"<p><\/p>\n<div>\n<div class=\"article-image\">\n<figure><img loading=\"lazy\" decoding=\"async\" class=\"lazy lazy-hidden size-full wp-image-2054400\" data-lazy-type=\"image\" src=\"https:\/\/images.financialexpress.com\/2020\/08\/1-452.jpg\" alt=\"RBI had earlier allowed lenders to restructure personal as well as corporate loans with strict barriers.\" width=\"660\" height=\"440\" srcset=\"\" sizes=\"auto, (max-width: 660px) 100vw, 660px\"\/><noscript><img loading=\"lazy\" decoding=\"async\" class=\"lazy lazy-hidden size-full wp-image-2054400\" data-lazy-type=\"image\" src=\"https:\/\/images.financialexpress.com\/2020\/08\/1-452.jpg\" alt=\"RBI had earlier allowed lenders to restructure personal as well as corporate loans with strict barriers.\" width=\"660\" height=\"440\" srcset=\"\" sizes=\"auto, (max-width: 660px) 100vw, 660px\"\/><noscript><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-2054400\" src=\"https:\/\/images.financialexpress.com\/2020\/08\/1-452.jpg\" alt=\"RBI had earlier allowed lenders to restructure personal as well as corporate loans with strict barriers.\" width=\"660\" height=\"440\" srcset=\"https:\/\/images.financialexpress.com\/2020\/08\/1-452.jpg 660w, https:\/\/images.financialexpress.com\/2020\/08\/1-452-300x200.jpg 300w, https:\/\/images.financialexpress.com\/2020\/08\/1-452-620x413.jpg 620w, https:\/\/images.financialexpress.com\/2020\/08\/1-452-401x267.jpg 401w, https:\/\/images.financialexpress.com\/2020\/08\/1-452-440x293.jpg 440w, https:\/\/images.financialexpress.com\/2020\/08\/1-452-80x54.jpg 80w, https:\/\/images.financialexpress.com\/2020\/08\/1-452-313x209.jpg 313w\" sizes=\"auto, (max-width: 660px) 100vw, 660px\"\/><\/noscript><\/noscript><span class=\"article-caption\"><a target=\"_blank\" href=\"https:\/\/www.financialexpress.com\/tag\/rbi\/\" rel=\"noopener noreferrer\">RBI<\/a> had earlier allowed lenders to restructure personal as well as corporate loans with strict barriers.<\/span><\/figure>\n<\/div>\n<p>Despite restructuring relief from Reserve Bank of India (RBI), credit costs are likely to more than double for most of non-banking players, Acuite Ratings and Research said on Thursday. In a discussion on non-banking financial companies (NBFCs) amid Covid-19, the rating firm said that profitability headwinds for shadow banks would remain high due to sharp decline in disbursements. RBI had earlier allowed lenders to restructure personal as well as corporate loans with strict barriers.<\/p>\n<p>PN Prasad, former deputy managing director (DMD), <a target=\"_blank\" href=\"https:\/\/www.financialexpress.com\/market\/stock-market\/state-bank-of-india-stock-price\/\" rel=\"noopener noreferrer\">State Bank of India<\/a>, said that restructuring exercise would be co-operation test for the lenders as they have to act quickly to resolve accounts. The regulator has mandated banks and NBFCs to form inter-creditor agreement (ICA) for resolving corporate accounts, to be invoked by December, 2020.<\/p>\n<p>The rating firm, however, expects liquidity to remain stable for NBFCs including housing finance companies (HFCs). Suman Chowdhury, chief analytical officer, Acuite Ratings and Research, said that liquidity for most players is likely to be stable due to availability of refinancing support from banking system. The rating firm said that over `75,000 crore was raised by NBFCs from April to July this year through long term repo operations (LTRO) and targeted long term repo operations (TLTRO). \u201cOver `6,000 crore was raised by NBFCs and HFCs in A and BBB category, despite the increased credit aversion,\u201d Chowdhury further said.<\/p>\n<p>Kailash Baheti, group chief financial officer (CFO), <a target=\"_blank\" href=\"https:\/\/www.financialexpress.com\/market\/stock-market\/magma-fincorp-ltd-stock-price\/\" rel=\"noopener noreferrer\">Magma Fincorp<\/a>, said that liquidity flow for NBFCs should be continuous. \u201cOversupply or undersupply of money is not a great thing,\u201d he added. Similarly, Sandeep Menon, founder managing director (MD) and chief executive officer of Vastu Housing Finance Corporation, acknowledged that his firm has reduced its cost of funds in past few months. However, he cautioned about liquidity being available for shorter duration. \u201cShort term opportunism may hurt you in long term,\u201d he said.<\/p>\n<p>Acuite Ratings suspects stress to be higher in commercial vehicle (CV), small and medium enterprises (SME) and urban microfinance portfolios to be reflected through either higher non-performing assets (NPAs) or restructured loans in next two-three quarters.<\/p>\n<p>The rating and research firm also highlighted that NBFCs had started to report a pick up in collections from June. Although, a significant portion of NBFCs continues to remain in moratorium. As per rating agency, around 45% of NBFC loan book is under moratorium in the second phase. This number has significantly reduced from levels of 65% of the loan book under moratorium in the first phase. RBI had allowed lenders to grant moratorium relief to borrowers for three months from March 1, in the first phase. The regulator extended moratorium period by three months till August, 2020 in the second phase.<\/p>\n<p>With an end to moratorium in August, delinquencies are expected to rise, which will test the collection infrastructure of the lenders, the rating firm said.<\/p>\n<div class=\"common-bottom-text\">\n<p>Get live <a href=\"https:\/\/www.financialexpress.com\/market\/stock-market\/\" target=\"_blank\" rel=\"noopener noreferrer\">Stock Prices<\/a> from <a href=\"https:\/\/www.financialexpress.com\/market\/stock-market\/s-p-bse-sensex-stock-price\/\" target=\"_blank\" rel=\"noopener noreferrer\">BSE<\/a>, <a href=\"https:\/\/www.financialexpress.com\/market\/stock-market\/nifty-50-stock-price\/\" target=\"_blank\" rel=\"noopener noreferrer\">NSE<\/a>, <a href=\"https:\/\/www.financialexpress.com\/investing-abroad\/\" target=\"_blank\" rel=\"noopener noreferrer\">US Market<\/a> and latest NAV, portfolio of <a href=\"https:\/\/www.financialexpress.com\/mutual-funds-india\/\" target=\"_blank\" rel=\"noopener noreferrer\">Mutual Funds<\/a>, calculate your tax by <a href=\"https:\/\/www.financialexpress.com\/income-tax-calculator\/\" target=\"_blank\" rel=\"noopener noreferrer\">Income Tax Calculator<\/a>, know market\u2019s <a href=\"https:\/\/www.financialexpress.com\/market\/stock-market\/nse-top-gainers\/\" target=\"_blank\" rel=\"noopener noreferrer\">Top Gainers<\/a>, <a href=\"https:\/\/www.financialexpress.com\/market\/stock-market\/nse-top-losers\/\" target=\"_blank\" rel=\"noopener noreferrer\">Top Losers<\/a> &amp; <a href=\"https:\/\/www.financialexpress.com\/mutual-funds-india\/equity-funds\/\" target=\"_blank\" rel=\"noopener noreferrer\">Best Equity Funds<\/a>. Like us on <a href=\"https:\/\/www.facebook.com\/thefinancialexpress\" target=\"_blank\" rel=\"noopener noreferrer\">Facebook<\/a> and follow us on <a href=\"https:\/\/twitter.com\/FinancialXpress\" target=\"_blank\" rel=\"noopener noreferrer\">Twitter<\/a>.<\/p>\n<p class=\"telegram-text\"><img loading=\"lazy\" decoding=\"async\" class=\"telegrma_img\" src=\"https:\/\/images.financialexpress.com\/2020\/04\/telegram.png\" alt=\"\" width=\"24\" height=\"24\" style=\"margin: 0px 5px 4px 0px; float: left;\"\/>Financial Express is now on Telegram. <a href=\"https:\/\/t.me\/TheFinancialExpressOnline\" target=\"_blank\" rel=\"noopener noreferrer\">Click here to join our channel<\/a> and stay updated with the latest Biz news and updates.<\/p>\n<\/div>\n<\/div>\n<p><script async src=\"\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><br \/>\n<br \/><a href=\\\"https:\/\/www.financialexpress.com\/industry\/banking-finance\/credit-cost-to-more-than-double-for-nbfcs-says-acuite-ratings\/2054390\/\\\">Source link <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>RBI had earlier allowed lenders to restructure personal as well as corporate loans with strict barriers. Despite restructuring relief from Reserve Bank of India (RBI), credit costs are likely to more than double for most of non-banking players, Acuite Ratings and Research said on Thursday. In a discussion on non-banking [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":14851,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"spay_email":"","footnotes":""},"categories":[36],"tags":[],"class_list":["post-14850","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-banking-business"],"jetpack_featured_media_url":"https:\/\/bengalnewstimes.com\/wp-content\/uploads\/2020\/08\/1-452.jpg","_links":{"self":[{"href":"https:\/\/bengalnewstimes.com\/index.php?rest_route=\/wp\/v2\/posts\/14850","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bengalnewstimes.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bengalnewstimes.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/bengalnewstimes.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/bengalnewstimes.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=14850"}],"version-history":[{"count":0,"href":"https:\/\/bengalnewstimes.com\/index.php?rest_route=\/wp\/v2\/posts\/14850\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/bengalnewstimes.com\/index.php?rest_route=\/wp\/v2\/media\/14851"}],"wp:attachment":[{"href":"https:\/\/bengalnewstimes.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=14850"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bengalnewstimes.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=14850"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bengalnewstimes.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=14850"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}