Breaking News

You are here » Indian-Commodity  :  Economy  :  Liquidity issues faced by NBFIs to weigh on India's growth prospects: Moody's

14-Dec2018

Liquidity issues faced by NBFIs to weigh on India's growth prospects: Moody's

Raising concerns over economic growth, global credit ratings agency, Moody's Investors Service has said that liquidity constraints faced by some non-bank financial institutions (NBFIs) in India, after the default of Infrastructure Leasing & Financial Services (IL&FS) in September 2018, will likely tighten credit supply and the country's Gross Domestic Product (GDP) growth rate will slow to just a little over 7% for the fiscal 2019 and 2020. Besides, Indian economy grew at 7.1% in the July-September quarter of FY19, lower than 8.2% in April-June.

Moody's also said that just above 7% growth for fiscal 2019 and 2020, is below an estimated 7.4% outturn in the fiscal year ending March 2018 and below the pick-up in growth that they envisaged a few months ago. It added that any further distress in the NBFI sector will pose significant downside risks to India's growth outlook. The nation's NBFIs are an important provider of credit to the country's economy and, in the fiscal year ended March 31, 2018, accounted for nearly 17% of total loans and one third of total retail loans.

The rating agency further said in a downside scenario, a sharper slowdown in NBFI credit supply would significantly tighten overall credit availability, drive up borrowing costs and reduce economic growth by around half a percentage point over a few years. It noted that weaker nominal GDP growth over a prolonged period would weigh on India's fiscal strength and the overall sovereign credit profile.


Related News

View all news

Govt increases investment limit for availing income tax concessions by startups

The government has given a major relief to startups by enhancing definition of startups. It has decided to relax angel tax norms for startups, including increasing the investment limit to Rs 25 crore for......

India needs revolution in farm sector to achieve 9-10% GDP growth: Niti Aayog CEO

Niti Aayog CEO Amitabh Kant has stated that there is need to bring revolution in farm sector to attain 9-10% Gross Domestic Product (GDP) growth. He also said that there is a need to boost investment in......

ASSOCHAM pitches for growth rate of 8-8.5% per annum

In order to make India a $5 trillion economy by 2025, Industry body Associated Chambers of Commerce and Industry of India (ASSOCHAM) has come out with charter of demands and called on political parties......

Top News

View all news

Power Grid fully utilises JPY 22 billion loan

Power Grid Corporation has fully drawn a 22 billion Japanese Yen (JPY) loan and utilised it to finance capital expenditure for its ongoing and new projects.Power Grid had entered into a JPY 22-billion......

Mahindra deploys six armoured Marksman at Delhi Airport

Mahindra Group has deployed six armoured Marksman vehicles at Indira Gandhi International Airport in Delhi. With this deployment, Delhi airport becomes first to get bullet-proof vehicle in its premises......

Oil India signs MoU with Gauhati University: Report

Oil India and Gauhati University have reportedly signed a Memorandum of Understanding (MoU) on March 19, 2019. The MoU aims to extend the facility of Technology Incubation Centre at Gauhati University......