InvestorQ : DO you really see the COVID-19 pandemic impacting the non banking finance companies (NBFCs) and the micro finance institutions (MFIs) in India and how?
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DO you really see the COVID-19 pandemic impacting the non banking finance companies (NBFCs) and the micro finance institutions (MFIs) in India and how?

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Anu Biswas answered.
1 year ago
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If you look at the price performance of the NBFCs in the last 3 months, the damage has been in the range of 40-50% and in some instances even more. Here is what you need to know about the NBFCs and their impact from the COVID-19.

· Revenue streams of all NBFCs will be hugely impacted as there would be a significant drop in transactions, loan repayments, etc. at all levels countrywide. This means less collection by the NBFCs impacting their day to day operations and profitability.

· Impacted businesses due to COVID-19 may take time to repay their loans and would further require financial assistance to weather the storm once the crisis is over.

· NBFCs relying on digital processing of transactions& bills can get their processes disrupted due to hardware shortages since importing countries like Korea and China are not operating their factories. Also many NBFCs cater to the funding needs of MSMEs but these small enterprises have been struggling to sustain business and this will impact the NBFCs asset quality requirements.

· New policy measures or accounting rules could make the NBFCs vulnerable as the Coronavirus pandemic. There would also be larger work pressure on NBFC employees to complete all the pending piled up work once the crisis is stable and stretched targets on each employee to grow business.

· NBFCs that are well prepared with their business continuity and contingency plan can quickly respond back post the Coronavirus outbreak slows down. Here it could be a winner takes it all approach as A well-prepared organization can definitely bounce back, and NBFCs with proper planning can overcome the impact of this disruption.

It is hoped by most of the NBFCs that the weakening economy due to COVID-19 may force Indian government & regulators to take necessary measures to strengthen NBFCs. The critical thing to do now is to stabilize the system, give confidence to the consumers.

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