NBFCs Feel the Heat as Mutual Funds Cut Exposure
May 10, 2019
The unexpected default in 2018 by IL&FS Group is having a ripple effect on mutual fund investments, making it more difficult and expensive for companies in the sector to get access to funding.
The NBFCs are on a stake-selling spree, or they are trying to raise funds through disposals and securitization of more loans. On the other hand, however, mutual funds are reducing their exposure to NBFCs and housing finance companies as a sign of a significant reduction in credit flow to specific lenders. It also reflects the concerns of the investors have due to the recent credit downgrades of debt instruments.