Financial Fragility in the NBFC Sector

  • Survey investigates the key drivers of Rollover Risk of the shadow banking system in India in light of the current liquidity crunch in the sector.
  • Key drivers of Rollover Risk:
    • Asset Liability Management (ALM) Risk.
    • Interconnectedness Risk.
    • Financial and Operating Resilience of an NBFC.
    • Over-dependence on short-term wholesale funding.
  • Survey computes a diagnostic (Health Score) by quantifying the Rollover risk for a sample of HFCs and Retail-NBFCs (which are representative of their respective sectors).
  • The analysis of the Health Score has the following findings:
    • The HFC sector exhibited a declining trend post 2014 and overall health of the sector worsened considerably by the end of FY2019.
    • The Score of ....
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