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NBFCs to emerge stronger from this crisis

Aug 21, 2019

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MVIRDC World Trade Center Mumbai organized a panel discussion on ‘Strengthening the NBFC Sector’ in association with All India Association of Industries. It addressed various concerns of non banking finance corporations (NBFCs) and its impact on economy.

“NBFCs play major role in providing last mile connectivity and bringing small enterprises to the formal financial sector. After one year of NBFC crisis, the days of panic have passed and there is no need for asset quality review of NBFCs”, said Mr. K.V. Srinivasan, Director and CEO, Profectus Capital.

Mr. Umesh Revankar, MD & CEO, Shriram Transport Finance pointed that the slowdown is due to slew of regulatory changes, weak monsoon and slackness during election season. Mr. Vijay Deshwal, Head – Services Sector Group, Wholesale Banking, ICICI Bank opined that NBFC sector will emerge strong from the crisis as it will re-align its capital structure and improve governance. The collaboration of banks and NBFCs will grow stronger through co-origination, liability franchise and securitization.

Mr. Mahesh Thakkar, Director General, Finance Industry Development Council said, “Government should allow on-tap issuance of non-convertible debentures, permit refinance of Mudra loans and open separate refinance window for NBFCs. This will help strengthen its financial position and promote fresh lending from NBFCs.”

Mr. Krishnan Sitaraman, Senior Director, CRISIL clarified, “During May-July 2019, NBFCs have managed to raise 70% of total funding compared to the corresponding period last year. NBFCs with sound governance and asset liability management have no problem in raising finance. This crisis situation is the period of adjustment for NBFC sector.”

Ms. Sunaina Dacunha, Senior Fund Manager, Aditya Birla Sun Life AMC remarked, “NBFC is a heterogeneous industry comprising housing finance companies, micro lending institutions, auto finance companies and structured finance institutions. The companies with strong balance sheet and large corporate lineage do not face difficulty in accessing capital.”

Earlier in his welcome address, Mr. Firoze B. Andhyarujina, Legal Advisor, MVIRDC WTC Mumbai said, “The current NBFC crisis brings to the fore the role of credit rating agencies, auditors and that of independent directors. Slowdown in NBFC financing has affected automobile and real estate sectors, thereby claiming at least 250,000 jobs so far. The impact is on the entire economy. Therefore, we need to create a mechanism to segregate financially sound NBFCs from weak ones.”
The event was attended by representatives from MSMEs, banks, NBFCs and other financial institutions.

Photo Caption - DSC_0140:
(L-R) Ms. Rupa Naik, Senior Director, Mr. Firoze B. Andhyarujina, Legal Advisor, MVIRDC WTC Mumbai; Mr. Srinivasan, Director and CEO, Profectus Capital, Mr. Mahesh Thakkar, Director General, FIDC, Mr. Umesh Revankar, MD & CEO, Shriram Transport Finance, Ms. Sunaina Dacunha, Senior Fund Manager, Aditya Birla Sun Life AMC, Mr. Vijay Deshwal, Head – Services Sector Group, Wholesale Banking, ICICI Bank and Mr. Krishnan Sitaraman, Senior Director, CRISIL.