There is an “imminent crisis” in the non-banking financial companies (NBFCs) sector and misadventures by large companies and a credit squeeze present ‘a perfect recipe for disaster’, a top government official said on Sunday.
In recent months, the country’s financial system has been hit by a default at Infrastructure Leasing and Financial Services (IL&FS) and stress at other companies, and the comments by Corporate Affairs Secretary Injeti Srinivas are likely to send a shiver down the spine of the auto industry as NBFCs play a key role in funding car purchases.
“There is an imminent crisis in the NBFC sector. There is a credit squeeze, over-leveraging, excessive concentration, massive mismatch between assets and liabilities, coupled with some misadventures by some very large entities, which is a perfect recipe for disaster,” Srinivas said.
