‘NBFCs to face liquidity pressure on lack of clarity on moratorium’

Mumbai: Non-banking finance companies are likely to face liquidity challenges due to lack of clarity on the applicability of the Reserve Bank's moratorium on their bank loans and poor collection due to the nationwide lockdown, says a report.

According to a report by rating agency Crisil, Nonbanking finance companies (NBFCs) face a double whammy because they are offering moratorium to customers despite not getting one themselves from their lender-banks. "Given the challenges in access to fresh funding, and presuming nil collections, a number of NBFCs will face liquidity challenges if they do not get a moratorium on servicing their own bank loans and are forced to meet all debt obligations on time," rating agency's senior director Krishnan Sitaraman said in a report.

In order to tide over any liquidity stress caused by the impact of coronavirus, RBI had announced a relief package which included a three-month moratorium on payment of all term loans outstanding as on March 1, 2020.

NBFCs have sought clarity from RBI on applicability of moratorium and also on access to a formal liquidity window which may provide some structural liquidity support to them similar to that available for banks. It said almost three fourths of NBFCs will have a liquidity cover of over three times to meet capital market debt obligations up to May 31, 2020, when the moratorium is slated to end, while only 3 per cent have less than one time liquidity cover.

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