The funding environment for non-banking financial companies (NBFCs) has improved from what it was in April and May 2020.
However, mutual funds are still exercising caution in funding them. State-run banks have lent money to NBFCs
under the Targeted Long-Term Repo Operations and Partial Credit Guarantee schemes (18-month money). India Ratings (Ind-Ra) said that the funding environment would remain volatile during FY21, and further disruption in the operating environment could make access to funds challenging for low-rated NBFCs.
It added that it would be a long time before NBFC operations returned to normal, and asset quality issues would impact overall profitability in FY21 and beyond. Thus, NBFCs
have increased their focus on collections and have tightened underwriting standards; portfolio growth will take a back seat.