To further ease the funding strains being faced by non-bank lenders, the Reserve Bank of India has allowed banks to offer partial credit enhancement to bonds issued by some of these firms.
The provision will be helpful for smaller NBFCs which are rated below AA, said Anil Gupta, head of financial sector ratings at rating agency ICRA. Gupta explained that credit enhancement is typically used to bring the rating profile to AA or AAA.
The decision could have a strong “signalling” impact and help smaller retail focused NBFCs, added Shameek Ray, head of debt capital markets at ICICI Securities Primary Dealership.
The decision could have a strong signalling impact and be particularly beneficial for the smaller NBFCs who are rated around BBB and could have up to 2 or 3 notch higher ratings. The provision may also be more helpful for retail NBFCs with granular portfolios rather than those in corporate lending with concentrated portfoliosShameek Ray, Head - Debt Capital Markets, ICICI Securities Primary Dealership
ADVERTISEMENT
RECOMMENDED FOR YOU
POPULAR
1
Fine Organics, PCBL — PL Capital's Top Stock Picks In Chemical Sector; Q1 Results Preview
2
Stock Market Live: Nifty, Sensex Flat After Initial Decline Amid Trade Flux; HUL, Asian Paints Top Gainers
3
Water Level In Mumbai Lakes Rises To Nearly 68%; IMD Predicts More Rainfall Till July 10
4
Buy Or Sell: 360 One Wam, HUL, GMR Airport On Kunal Rambhia's Radar — Check Target Price
5