Crisil to evaluate NBFC moves

MUMBAI, Jan 2: The Credit Rating Information Services of India Limited (Crisil), the leading rating agency in the country, is evaluating the...

MUMBAI, Jan 2: The Credit Rating Information Services of India Limited (Crisil), the leading rating agency in the country, is evaluating the impact of the new Reserve Bank of India (RBI) guidelines for the non-banking finance companies (NBFCs).

In a statement, Crisil has said RBI has made rating central to the regulation of the NBFCs, and linked rating to FD borrowing limits. Crisil would evaluate the strategies adopted by the finance companies to bring their balance sheets in line with the RBI norms, it said.

A record 115 non-banking finance companies have been downgraded by credit-rating agencies in the first nine months of the current fiscal. This accounts for over 50 per cent of the total number of companies downgraded during 1997-98. The business environment for the non-banking sector during the last two years has been difficult, which has affected the business and financial performance of the sector as a whole The three credit-rating agencies, ICRA, Credit Analysis & Research Ltd (Care) and Crisil, swung into action in the aftermath of the CRB Caps fiasco. CARE, in fact, received a lot of flak from the industry for being slow in anticipating the CRB collapse. Crisil added drama to the shakeout in this segment of the financial world by downgrading 14 top non-banking NBFCs at one stroke in October. The list of downgraded companies included heavyweights like Kotak Mahindra Fin, Cholamandalam Investment & Finance, 20th Century Finance Corporation, Lloyds Finance, Alpic Finance, Reliance Capital, Anagram Finance, DCM Finance, PAL Credit, ITC Classic, Ashok Leyland Fin, Birla Global Finance and Times Guaranty.