The regulatory framework for the non-banking financial institutions or the NBFIs have been changed recently. However, the big credit rating agency Fitch Ratings has also summoned this decision to be positive.
Fitch Ratings said that these changes are likely to improve the funding environment and will also improve the stability in this sector.
The company also added to its statement that these reforms will preserve all the niche business falling under the NBFI sector.
This will correspondingly improve the funding environment of many entities as the investor’s confidence will get boosted.
These proposed changes to the Indian Regulatory framework took place on January 22 when the Reserve Bank of India unveiled its discussion paper.
On a combined note, the sector is likely to get improved as a whole. There are chances of more improvement in the overall governance and risk management -system.
Company has also stated that these changes will somehow improve the system by strengthening the governance and risk management.
Although, the company doesn’t view these things to be the weak points regarding the credit weakness for Fitch-rated Indian NBFIs.
Fitch Ratings have also proclaimed that these changes will however not affect the business models. It further added that some lending activities can get reduced especially in the realty sector.
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