About Rs 2.3 lakh crore worth of commercial papers (CPs) and non-convertible debentures (NCDs) issued by liquidity-hit non-banking financial companies (NBFCs) are to mature by December. Is there a systemic risk? Or do the RBI and the government have things under control?
The government wants a dedicated window to infuse liquidity (similar to 2009) but the central bank believes there are enough means available at its disposal. It recently allowed banks to give partial credit support to NBFC bonds.
After concluding Rs 36,000 crore of open market operations in October, the RBI will inject an additional Rs 40,000 crore in November. The NHB also raised the refinancing limit to Rs 30,000 crore, while banks such as SBI raised portfolio buyout target by 2-3 times. Experts say any default is unlikely as most NBFCs are able to rollover CPs/NCDs, but easy money flow for high-flying NBFCs has certainly ended.