Liquidity steps for NBFCs too short-term: Fitch

Mumbai: The government measures to provide partial credit guarantee to public sector bank on their asset purchases from NBFCs can ease funding pressure only for the short-term, says a report.

In the budget, the government had said for purchase of high-rated pooled assets of financially-sound NBFCs, amounting to Rs 1 trillion

during the current financial year, it will provide a one-time six months' partial credit guarantee to public sector banks for their first loss of up to 10 per cent.

The step, however, does not address investors' long- term concerns about the exposure of NBFCs' to stressed real estate, rating agency Fitch said in a report on Thursday.

"The guarantee is more than enough to cover typical losses. The government will cover up to Rs 1 trillion of issuance. We estimate that this will cover their liquidity needs for about six months," the agency said.