Rising COVID cases may add to asset quality risks of NBFIs, says Fitch


Bad news came about the lenders, due to the increase in the cases of Kovid, there could be a big crisis

New Delhi. Credit rating agency Fitch Ratings said on Friday that due to rising cases of Kovid-19 infection, there may be delay in recovery of loans of MSMEs (micro, small and medium enterprises) and non-banking financial institutions. (NBFIs) may have increased asset quality risk.

Fitch estimates that India’s economic growth will be 8.4 percent in the current financial year ending March 2022. The rating agency also said that the asset quality of Indian NBFIs may deteriorate in 2022, mainly due to delays in lending to MSMEs and microfinance.

The Reserve Bank of India’s Financial Stability Report published in December 2021 also noted emerging signs of stress in MSMEs as well as microfinance institutions. The rating agency said such borrowers generally operate on limited cash buffers and capital, and have been hit hard during the pandemic.

Fitch said that due to the outbreak of Omicron form in India, there may be delay in recovery of micro, small and medium enterprises and microfinance loans. According to the data released by the Union Health Ministry on Friday, there have been 2,64,202 new cases of corona virus infection in the country in the last 24 hours, which is the highest in 239 days. With the arrival of these new cases, the number of infected has increased to 3,65,82,129. This includes 5,753 cases of the Omicron form of this deadly virus.

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