CRISIL\u2019s analysis of the liquidity position of the large non-banks – both non-banking financial companies (NBFCs) and housing finance companies (HFCs) \u2013 that it rates, shows that they are maintaining adequate liquidity buffer to manage mismatches, if any, in their asset-liability maturity (ALM) profiles.<\/p>\n
Krishnan Sitaraman, Senior Director, CRISIL Ratings, \u201cIn an environment where access to funding has become a function of market confidence, the quantum and quality of such liquidity cushion will be the key differentiator. That said, the business fundamentals of non-banks – such as growth potential, asset quality and capitalisation \u2013 still look solid.\u201d<\/p>\n
CRISIL\u2019s analysis of the ALM profiles of its large, rated non-banks reveals the following:<\/p>\n
1) NBFCs operating in shorter-tenure loan assets such as consumer durables, microfinance, two-wheelers and personal loans are comfortably placed with positive gap1 in the \u2018up to 6 months\u2019 maturity bucket. This is even without considering unutilized \/ undrawn bank lines.<\/p>\n
2) For NBFCs operating in other asset classes such as vehicle finance, small and medium enterprise (SME) loans and loans against property (LAP), some of them reported a negative gap in the \u2018up to 6 months\u2019 bucket with the proportion of short-term borrowings (including commercial paper) being the key driver. However, if the liquidity cushion available in the form of unutilised \/ undrawn bank lines is taken into consideration, the negative gaps turned positive across maturity buckets up to 1 year.<\/p>\n
3) Expectedly, HFCs have negative gaps in operating cash flows in most maturity buckets \u2018up to 6 months\u2019, which is typical to the business. However, some of the larger HFCs do maintain cash and equivalents to more than offset this mismatch. And, if the unutilised \/ undrawn bank lines are taken into consideration, other HFCs will also show a positive gap.<\/p>\n
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CRISIL\u2019s analysis of the liquidity position of the large non-banks – both non-banking financial companies (NBFCs) and housing finance companies (HFCs) \u2013 that it rates, shows that they are maintaining adequate liquidity buffer to manage mismatches, if any, in their asset-liability maturity (ALM) profiles. Krishnan Sitaraman, Senior Director, CRISIL Ratings, \u201cIn an environment where access […]<\/p>\n","protected":false},"author":3,"featured_media":2228,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"footnotes":""},"categories":[31],"tags":[1164,1891,1890,664,1889,1892],"class_list":["post-2254","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news","tag-consumer-durables","tag-microfinance","tag-non-banking-financial-companies-nbfcs-and-housing-finance-companies-hfcs","tag-personal-loans","tag-sset-liability-maturity-alm","tag-two-wheelers"],"aioseo_notices":[],"aioseo_head":"\n\t\t\n\t\n\t\n\t\n\t\n\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t