It is difficult for investors to reduce their losses in NBFC's debt instruments

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New delhi date. October 7, 2019, Monday

As the crisis of India's non-banking finance companies (NBFCs) is deepening, it is becoming increasingly difficult for investors who have invested in debt instruments in the sector to reduce their losses. The situation has become even more speculative for mutual funds holding huge holdings of NBFC bonds. As a result, the money from small investors who have invested in fund house schemes to companies has been put at risk.

Trading in NBFC bonds in the secondary market in September fell to a five-month low of Rs 5 crore, which is the lowest since April, according to data compiled by a research firm.

Fund houses investment in the NBFC sector has been the lowest in two years. NBFC bonds have more sellers than borrowers. Lack of attraction among investors and downgrades by rating agencies does not result in buying into NBFC bonds.

Considering that the reliability of the NBFC is declining day by day, trading volumes in the NBFC are expected to decline for at least a year, sources said.

Investors' confidence has waned since IL&FS suddenly started to default in the 5th. The then Altico Capitas, the PMC Bank chapter, has given investors more shocks. It was also reported that some asset managers were contracting with stressed companies to cope with the rising tensions in the finance sector.


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