There is 'imminent crisis' in NBFC sector: Corp Affairs Secy.
There is an 'imminent crisis' in the non-banking financial companies (NBFCs) sector as misadventures by some large entities and credit squeeze present a perfect recipe for disaster, a senior government official has said.
In recent months, the country's financial system has been grappling with multiple woes in the wake of the turmoil at diversified IL&FS group as well as debt defaults by some other large entities.
Corporate Affairs Secretary Injeti Srinivas said in one of the interviews, the NBFC sector is facing issues of credit squeeze, over-leveraging and misadventures by some large entities.
However, he added that "responsible" companies are managing the risk well and are not facing such a dire situation.
Srinivas also said corporate governance in India is being put to test.
"It is a defining moment. The way things are moving, in the medium to long term it will be for the good. In the short term, there can be turbulence," he said.
"If you are responsible, you manage the risks. There are many companies in the country that have strong corporate governance. They take risks but manage them as well. So, they don't face such dire situation that some others are facing today," Srinivas said.
Amid instances of the situation of non-performing assets(NPAs) being linked to external factors, Srinivas noted that it would not be a convincing explanation.
"To say that the situation (NPA) can be attributed entirely to external factors and business risks is not a convincing answer because there is something known as responsible behaviour," he emphasised
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02-2026
