InvestorQ : How do NBFCs plan to repay the bonds that are due in the next few months? Do they also get a moratorium?
NISHA Nayak made post

How do NBFCs plan to repay the bonds that are due in the next few months? Do they also get a moratorium?

Answer
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5 months ago


In fact, the upcoming debt repayment for NBFCs is very huge. According to estimates, Indian NBFCs may be staring at a huge Rs.250,000 crore worth of NCDs and Commercial Paper (CP) maturing between May and June 2020. There is just not enough liquidity in these NBFCs to handle such payouts and even banks cannot lend so much. In addition, there is also a regulatory issue here. The RBI has instructed banks to give a moratorium of 3 months to banks but no instruction has gone to NBFCs. However, SEBI has given instructions to the rating agencies to go slow on rating downgrades during this period. This has put most of the NBFCs, rating agencies in a state of quandary. Also mutual funds have a major challenge ahead as many mutual funds are heavily invested in such NBFC debt paper. In fact, NBFCs and mutual funds have been seeking clarity on how they should classify the likely defaults on debt maturing in the next two months. Like in the case of retail and SME borrowers, some kind of flexibility will be welcome but that is not too clear at this point of time.