InvestorQ : What are the NBFCs that could have a problem in repaying loans in September?
Moii Chavate made post

What are the NBFCs that could have a problem in repaying loans in September?

swati Bakhda answered.
2 years ago

To answer this question, you need to first understand the major categories of NBFCs and how each of them will respond to the repayment liabilities. The first category, there are the likes of HDFC and LIC Housing with access to institutional sources of funding. So, any rollover should not pose major problems. Secondly, there are the stronger private players like IIFL, Edelweiss that have maintained comfortable liquidity cushion and manageable leverage. They should also sail through easily. The most vulnerable segment will be the NBFCs that have a maturity mismatch. These are the ones like DHFL and others that have borrowed short term via CPs, short term NCDs etc and lent long term in the form of home loans, builder loans and infrastructure projects. These are exposed to risk.

Most likely, the government and the RBI may have to step in to soften the impact and it may not be too difficult with some bit of planning. At least in cases where the risk is purely of liquidity, the banks (supported by RBI lines of credit) must step in with the required liquidity. Additionally, the government must give comfort to the banks by extending its partial guarantee scheme. Government does realize that in a fragile situation even a small default can have a cascading impact. This should most likely get managed without hiccups.