Just 205 words from Shaktikanta Das on nonbanking financial companies (NBFCs) is all that has taken for many in the business and the wider world of stakeholders - to take a hard look at the way they transact. The Reserve Bank of India (RBI) governor's statement last fortnight (following the monetary policy committee meeting) may lead to banks looking at their exposures to NBFCs afresh, especially those with significant non-secured credit on their books. There have already been calls among private equity investors since and rating agencies are set to review shadow banks they rate.
Mint Road though was not being alarmist.
Read footnote 49 in Das's address: Gross nonperforming assets (GNPA) ratio of banks stood at 2.7 per cent at end-June 2024 - the lowest since end-March 2011. And even as he highlighted other sound financials of banks, he pointed to NBFCs' key health parameters which are moving in tandem with banking. GNPA and net-NPA ratios of NBFCs (excluding those under resolution) in June 2024 were 2.6 per cent and 1.1 per cent, respectively (it was 3.2 per cent and 1.2 per cent in the same quarter of the previous financial year). Clearly, only a few NBFCs, or shadow banks, were crossing regulatory redlines.
Mind the outliers
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