Global rating agency Standard and Poor’s (S&P) has demoted rankings on four Non-Bank Finance Companies (NBFC) which comprises Bajaj Finance, Shriram Transport Finance, Manappuram Finance and Power Finance Corporation.
“We believe worsening operating conditions following coronavirus have escalated risks for financial institutions operating in India. We may witness a recession to affect the financial sector,” it revealed in a release.
With this, it has also allocated ratings on STFC on CreditWatch with negative intimation. The viewpoint on Muthoot is negative, while it is stable for the other NBFCs, it further added.
“Credit risks remain very high for finance companies in India, in our view. We expect the downturn in NBFCs’ asset quality to intensify as the economy dips amid the pandemic,” it said, adding that it expects the micro-finance segment to be the most vulnerably affected by the lockdown and other measures in the fight against COVID-19.
On 26th June, the global rating agency also dropped ratings of private sector lender Axis Bank and had placed the ratings of Indian Bank on Credit Watch.