Worst is over for NBFCs but access to long-term funding still not there: Lakshmi Iyer, Kotak Mutual Fund

Most of the NBFCs/HFCs are easily being able to access the capital markets for their short-term liabilities including CPs, Lakshmi Iyer, CIO-Fixed Income & Head-Products, Kotak Mutual Fund, tells ET Now

Edited excerpts:

It seems the CP rollovers are progressing with ease. Would this be a big respite for liquidity in the system?

Post Diwali, the scenario is much better. There are not too many fireworks in the market at this point in time, but bulk of the NBFCs/HFCs, with the exception of a few names here or there, are easily being able to access the capital markets for their short-term liabilities including CPs.

Do you think this is all that can be done in terms of easing liquidity concerns in the interim?


Banking system liquidity still continues to be negative above a lakh crores because there have been GST outflows also. In mid December, there will be advance tax outflows. So, the banking system liquidity continues to be in a deficit mode and so long as this deficit continues to enhance, it will be very difficult for mutual funds as part of capital markets to be able to fund these NBFCs on a long-term durable basis.

So yes, short-term, there is still some respite but if they need access to long-term funding, the liquidity situation has to improve a bit.

Are there at least signs of business getting back to normal and in the interim the liquidity concerns getting addressed?

Definitely. The worst seems to be behind us but can we get better? The answer is yes.