Over Rs 70,000 crore debt of NBFCs maturing in Q1

MUMBAI: Over Rs 70,000 crore of debt issued by nearly 60 nonbanking finance companies (NBFCs) is coming up for redemption in the first quarter of FY21. The good news is that more than half of the debt is concentrated with the top 15 borrowers with strong parentage, and a portion of that has already been redeemed. Also, many of these issuers have floated bonds last month and are liquid, given that there has been hardly any offtake of retail loans since the lockdown.

According to debt market sources, several public sector and private banks are also providing a moratorium to select NBFCs. “Our discussions with smaller unlisted NBFCs and cooperatives across states indicate that they are availing bank moratorium, assignment/securitisation and obtaining fresh borrowings to ride through the current liquidity challenges,” said a report by Emkay Research.

According to the report, the problem that NBFCs will face will not be in terms of raising liquidity but in recovering loans from borrowers.


“We remain concerned about the potential asset-side issues emanating from a consistent rise in demand for loan moratorium (rise in the number of customers availing moratorium in May 2020 compared with the prior month) and difficulty in collection and recoveries amid lockdowns. According to our checks, 45-50% of MSMEs and 75% of vehicle loan takers have opted for moratorium,” said the report.

According to rating agencies, housing loans are the least risky in the finance sector. The extent of moratorium availed by home loan borrowers is relatively lower compared to other segments.

In early April, rating agency Crisil had estimated that almost three-fourths of NBFCs will have a liquidity cover of over 3 times to meet capital market debt obligations up to May 31, 2020, when the moratorium is slated to end.

On the other hand, only 3% had less than one-time liquidity cover. A liquidity cover of less than one time indicates inability to make debt repayments on time and in full, without the benefit of collections, external support, or access to additional credit lines or funding.