NEW DELHI: There is an "imminent crisis" in the non-banking financial companies (NBFCs) sector as misadventures by means of some large entities and credit squeeze present an ideal recipe for disaster, a senior govt respectable has stated.
In recent months, the rustic's financial device has been grappling with a couple of woes in the wake of the turmoil at assorted IL&FS staff as well as debt defaults by means of some other large entities.
In an interview to PTI, Corporate Affairs Secretary Injeti Srinivas stated the NBFC sector is dealing with problems with credit squeeze, over-leveraging and misadventures by means of some large entities.
"There is an imminent crisis in the NBFC sector. There is a credit squeeze, over-leveraging, excessive concentration, massive mismatch between assets and liabilities, coupled with some misadventures by some very large entities, which is a perfect recipe for disaster," Srinivas stated.
However, he added that "responsible" companies are managing the chance neatly and don't seem to be dealing with this type of dire scenario.
Srinivas also stated company governance in India is being put to check.
"It is a defining moment. The way things are moving, in the medium to long term it will be for the good. In the short term, there can be turbulence," he stated.
"If you are responsible, you manage the risks. There are many companies in the country that have strong corporate governance. They take risks but manage them as well. So, they don't face such dire situation that some others are facing today," Srinivas stated.
Amid cases of the situation of non-performing assets (NPAs) being connected to external components, Srinivas famous that it will no longer be a powerful explanation.
"To say that the situation (NPA) can be attributed entirely to external factors and business risks is not a convincing answer because there is something known as responsible behaviour," he emphasized.
Earlier this month, former Prime Minister Manmohan Singh stated the banking sector is "under severe stress" and the best way out of "this mess" is to opposite some "gross distortions", work intently with the RBI, re-start the method of credit supply and make sure sufficient liquidity and money in move.
The NPA "scare" has brought lending to a virtual halt, the former high minister had stated, adding that a "one-size-fits-all approach" drove companies into insolvency while demonetisation close out all assets of casual credit.
However, Finance Minister Arun Jaitley had disregarded the concerns, pronouncing, "When an economist turns into a politician, he loses sense of both economy and politics".
"Dr Manmohan Singh left behind in 2014 an economic slowdown, policy paralysis and corruption. He brought down his party to lowest ever strength in Parliament. India was a part of the fragile five. Today he regards the world's the fastest growing major economy as disastrous," Jaitley had stated.
In recent months, the rustic's financial device has been grappling with a couple of woes in the wake of the turmoil at assorted IL&FS staff as well as debt defaults by means of some other large entities.
In an interview to PTI, Corporate Affairs Secretary Injeti Srinivas stated the NBFC sector is dealing with problems with credit squeeze, over-leveraging and misadventures by means of some large entities.
"There is an imminent crisis in the NBFC sector. There is a credit squeeze, over-leveraging, excessive concentration, massive mismatch between assets and liabilities, coupled with some misadventures by some very large entities, which is a perfect recipe for disaster," Srinivas stated.
However, he added that "responsible" companies are managing the chance neatly and don't seem to be dealing with this type of dire scenario.
Srinivas also stated company governance in India is being put to check.
"It is a defining moment. The way things are moving, in the medium to long term it will be for the good. In the short term, there can be turbulence," he stated.
"If you are responsible, you manage the risks. There are many companies in the country that have strong corporate governance. They take risks but manage them as well. So, they don't face such dire situation that some others are facing today," Srinivas stated.
Amid cases of the situation of non-performing assets (NPAs) being connected to external components, Srinivas famous that it will no longer be a powerful explanation.
"To say that the situation (NPA) can be attributed entirely to external factors and business risks is not a convincing answer because there is something known as responsible behaviour," he emphasized.
Earlier this month, former Prime Minister Manmohan Singh stated the banking sector is "under severe stress" and the best way out of "this mess" is to opposite some "gross distortions", work intently with the RBI, re-start the method of credit supply and make sure sufficient liquidity and money in move.
The NPA "scare" has brought lending to a virtual halt, the former high minister had stated, adding that a "one-size-fits-all approach" drove companies into insolvency while demonetisation close out all assets of casual credit.
However, Finance Minister Arun Jaitley had disregarded the concerns, pronouncing, "When an economist turns into a politician, he loses sense of both economy and politics".
"Dr Manmohan Singh left behind in 2014 an economic slowdown, policy paralysis and corruption. He brought down his party to lowest ever strength in Parliament. India was a part of the fragile five. Today he regards the world's the fastest growing major economy as disastrous," Jaitley had stated.
Imminent crisis in NBFC sector: Corporate affairs secretary
![Imminent crisis in NBFC sector: Corporate affairs secretary]()
Reviewed by Kailash
on
May 12, 2019
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