MUMBAI: RBI’s directives, which raise risk weights on bank loans to finance companies and necessitate them to divest some of their investments in alternative investment funds, are not likely to adversely impact credit ratings of nonbanking finance companies.
Last month, RBI asked banks and finance companies to exit all investment in AIFs that have invested in companies that are debtors to the investing lenders.This directive came close on the heels of RBI’s move to curb bank loans to NBFCs. “We do not anticipate the ratings of NBFCs to be adversely affected by the RBI directive to liquidate investments in AIFs where the lenders have exposure,” Sanjay Kumar Agarwal, senior director at CareEdge Ratings, told TOI. CareEdge rates the largest number of NBFCs.
“The AIF route was instrumental for NBFCs in funding real estate projects with uncertain timelines. In the AIF, lenders tend to have exposure because there is a need for an initial investor with liquid resources. However, investments in such AIFs were existing assets are funded were considered as stressed assets for rating purposes,” said Agarwal.
Last month, RBI asked banks and finance companies to exit all investment in AIFs that have invested in companies that are debtors to the investing lenders.This directive came close on the heels of RBI’s move to curb bank loans to NBFCs. “We do not anticipate the ratings of NBFCs to be adversely affected by the RBI directive to liquidate investments in AIFs where the lenders have exposure,” Sanjay Kumar Agarwal, senior director at CareEdge Ratings, told TOI. CareEdge rates the largest number of NBFCs.
“The AIF route was instrumental for NBFCs in funding real estate projects with uncertain timelines. In the AIF, lenders tend to have exposure because there is a need for an initial investor with liquid resources. However, investments in such AIFs were existing assets are funded were considered as stressed assets for rating purposes,” said Agarwal.