The crisis in the NBFC sector is crippling consumer finance and adding to the slowdown in the economy
Dewan Housing Finance Ltd, India’s third-largest pure-play mortgage lender, made a net profit of 874 crore in the first half of 2018-19. In the second half, however, the picture completely turned, and DHFL reported a net loss of 1,036 crore in the year ended in March 2019. The company has defaulted on its interest payments and credit rating agencies downgraded its debt instruments to ‘D’, which is junk status. Several other NBFCs were also downgraded by rating agencies.
At the heart of DHFL’s troubles is a liquidity crisis that is threatening to shake up India’s non-banking financial services sector. Many non-banking financial companies (NBFCs) relied on raising short-term funds by issuing commercial papers to provide long-term loans. When the commercial papers matured, they would simply raise fresh short-term debt. Thus the cycle continued, but then the IL&FS crisis happened.
IL&FS, which funded large infrastructure projects, had a debt of 90,000 crore, and the company defaulted on repayment in August last year. Investors lost appetite, and liquidity in a large part of the sector dried up. The financial stability report of the Reserve Bank estimates that non-bank share in credit declined to 26.6 percent of the aggregate domestic sources in 2018-19, from 39.1 percent in 2017-18.
Denne historien er fra August 25, 2019-utgaven av THE WEEK.
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Denne historien er fra August 25, 2019-utgaven av THE WEEK.
Start din 7-dagers gratis prøveperiode på Magzter GOLD for å få tilgang til tusenvis av utvalgte premiumhistorier og 9000+ magasiner og aviser.
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William Dalrymple goes further back
Indian readers have long known William Dalrymple as the chronicler nonpareil of India in the early years of the British raj. His latest book, The Golden Road, is a striking departure, since it takes him to a period from about the third century BC to the 12th-13th centuries CE.
The bleat from the street
What with all the apps delivering straight to one’s doorstep, the supermarkets, the food halls and even the occasional (super-expensive) pop-up thela (cart) offering the woke from field-to-fork option, the good old veggie-market/mandi has fallen off my regular beat.
Courage and conviction
Justice A.M. Ahmadi's biography by his granddaughter brings out behind-the-scenes tension in the Supreme Court as it dealt with the Babri Masjid demolition case
EPIC ENTERPRISE
Gowri Ramnarayan's translation of Ponniyin Selvan brings a fresh perspective to her grandfather's magnum opus
Upgrade your jeans
If you don’t live in the top four-five northern states of India, winter means little else than a pair of jeans. I live in Mumbai, where only mad people wear jeans throughout the year. High temperatures and extreme levels of humidity ensure we go to work in mulmul salwars, cotton pants, or, if you are lucky like me, wear shorts every day.
Garden by the sea
When Kozhikode beach became a fertile ground for ideas with Manorama Hortus
RECRUITERS SPEAK
Industry requirements and selection criteria of management graduates
MORAL COMPASS
The need to infuse ethics into India's MBA landscape
B-SCHOOLS SHOULD UNDERSTAND THAT INDIAN ECONOMY IS GOING TO WITNESS A TREMENDOUS GROWTH
INTERVIEW - Prof DEBASHIS CHATTERJEE, director, Indian Institute of Management, Kozhikode
COURSE CORRECTION
India's best b-schools are navigating tumultuous times. Hurdles include lower salaries offered to their graduates and students misusing AI
