In Charts: Who Is Hurting Most From India’s NBFC Crisis?
Data released by FIDC shows that the impact of the liquidity crisis on fresh sanctions by NBFCs worsened in the fourth quarter.
The liquidity crisis being faced by India’s non banking financial companies has persisted for nearly nine months now. Over this period, NBFCs have been forced to conserve liquidity and cut back on fresh disbursements.
Data released by the Finance Industry Development Council, a self-regulatory organisation for NBFCs, shows that the impact of the ongoing liquidity crisis on fresh sanctions worsened in the fourth quarter.
Fresh sanctions contracted by 30.8 percent year-on-year in the January-March 2019 quarter, steeper than the 16.7 percent decline in the third quarter.
The data captures 95 percent of the assets under management of registered NBFCs. However, it excludes microfinance firms and housing finance firms. BloombergQuint could not independently verify the data.
Loan sanctions continued to decline sequentially too.
Loans worth Rs 1.96 lakh crore were sanctioned in the fourth quarter as against Rs 2.1 lakh crore in the third quarter and Rs 2.6 lakh crore in the second quarter. Sanctions have declined from a quarterly peak of Rs 2.8 lakh crore in the fourth quarter of 2017-18.
The FIDC also gives a break up of different loan categories targeted by NBFCs.
The sharpest decline has been seen in sanctions of long-term loans of over 3 years, which fell 77 percent in the fourth quarter over a year ago. This is likely because most NBFCs are attempting to balance out asset-liability mismatches emerging from short-term borrowings.
Property loans and commercial vehicle loans also saw sharp decline. Housing finance loans given by this set of NBFCs also declined but the data may not provide the full picture for this category since HFCs are not included in it.
Segments which continued to show growth included consumer loans, personal loans and gold loans. The last category saw a near 110 percent jump in sanctions on a year-on-year basis.
FIDC also provides a break-up on sanction in rural, semi-urban and urban areas.
The data suggests that the decline in fresh sanctions has been worst in urban areas.