This is the best time to invest in credit risk funds after IL&FS crisis in the Indian debt market, says Nimesh shah, MD & CEO of ICICI Prudential MF, in a panel discussion at ET market global summit.
IL&FS ( Infrastructure Leasing and Finance Service ) is a core investment company and a holding company of IL&FS group , which defaulted in payment obligation of bank loans ( including interest ) , term and short term deposit and failed to meet commercial paper redemption obligation due on 14th September, 2019.
IL&FS crisis changed Indian debt market. As per Nimesh Shah, credit spreads are better in current situations. Thus, NBFC , whose risks are well spread are good option.
One must be careful with aggressive lending, as it might create problem in long term. NBFC industry grew at rapid pace after bank stopped lending money. They compromised on classic asset liability principle and paid the price.
As a result, NBFC’s now diversify their source of funding so that they can maintain enough liquidity and doesn’t depend on just one source.