Transmission of rates for NBFCs may be impacted

THE TRANSMISSION OF repo rate cuts may not pass through effectively in non-bank financial companies (NBFCs) due to their higher cost of funds, according to a paper released by the RBI in its monthly bulletin.

- FE BUREAU

In addition, since non-bank lenders cater relatively to riskier borrower segments, they charge higher interest rates to account for potential defaults, which may further dampen the adjustment of lending rates to changes in relevant rates.