New Delhi: Measures to contain the spread of coronavirus will increase pressure on operating performance and financial profiles of nonbanking finance companies already suffering from sector-wide issues, Fitch Ratings said.
"Government-imposed activity restrictions in India will raise operational complications for the NBFIs (non-banking financial institutions), while any escalation in local infections would deal a blow to economic sentiment," Fitch said.
The disruptions due to COVID-10 pose a threat to the recovery of India's credit environment, which took hit in 2018, when a failure of systemically important non-banking finance companies spiraled into a sector-wide liquidity issue.
In wake of the growing impact of COVID-19, the international rating agency has already has downgraded the long-term issuer default rating of three Indian NBFCs--Shriram Transport Finance Co Ltd, Muthoot Finance Ltd and India Infoline Finance Ltd-- by one notch and placed all of them on ratings watch negative on Saturday.
