Business operations of fintech NBFCs, MFIs to take a hit after RBI diktat
RBI) diktat barring business operations of four non-bank lenders will have a significant impact on mid and small-sized NBFCs, particularly those focused on small-ticket unsecured loans, industry watchers say.
These NBFCs which are already grappling with constrained funding, could see a further slowing down of business. The RBI which has been continuously flagging build up of risks in the unsecured segment had said that more than half consumer loan borrowers are repaying at least three loans simultaneously. It had also said that delinquency levels among borrowers with loans below Rs 50,000 was extremely high.
«The immediate concern is that these lenders need continuous credit delivery and as these loans are unsecured, it is likely that they will face significant challenges on asset quality side and on extreme side, threaten their survival,» said Prakash Agarwal, Partner, Gefion Capital — a consulting firm. «The regulator's stance will lead to tighter funding for a broader range of players, exacerbating liquidity constraints. These business models are largely built on the need for steady flow of fresh lending and restrictions on incremental business will inevitably curtail their inflows, thereby challenging their capacity to meet existing obligations.»
The regulator on Thursday directed Sachin Bansal's Navi Finserv, Asirvad Micro Finance, Arohan Financial Services and DMI Finance to cease and desist from sanction and disbursal of loans, effective October 21. The RBI cited material supervisory concerns related to
