Money & Banking

Fitch Ratings downgrades Long-Term IDR for Shriram Transport Finance Company, Muthoot Finance

Our Bureau Mumbai | Updated on March 28, 2020 Published on March 28, 2020

Fitch Ratings has downgraded the Long-Term Issuer Default Ratings (IDRs) of Shriram Transport Finance Company Limited (STFC) and Muthoot Finance Limited (MFL) to 'BB' from 'BB+'.

It has also downgraded the Long-Term IDR of India Infoline Finance Limited (IIFL) to 'B+' from 'BB-'.

The global rating agency, in a statement, said the ratings of the aforementioned non-banking financial institutions (NBFIs) have been placed on Rating Watch Negative (RWN).

Fitch has also placed the 'BB-' Long-Term IDR of Manappuram Finance Limited (MFIN) on RWN.

According to the rating agency’s rating scale, ‘BB’ ratings indicate an elevated vulnerability to credit risk, particularly in the event of adverse changes in business or economic conditions over time; however, business or financial alternatives may be available to allow financial commitments to be met.

‘B’ ratings indicate that material credit risk is present. The modifiers "+" or "-" are appended to a rating to denote relative status within major rating categories.

Also read: Fitch forecasts India’s FY'21 GDP growth at 5.6 per cent

The agency said its rating actions reflect increasing macro-economic challenges for the Indian NBFI sector. These include the growing effects from measures to contain the COVID-19 pandemic, which will compound the tightening in funding conditions for NBFIs in recent weeks.

The RBI's recent liquidity and regulatory support measures should help to improve the funding environment in the near term, but it also underlines the severity of the situation and Fitch sees continued uncertainty in the coming months nonetheless.

Fitch also expects the constraints on business activity to lead to operational disruptions that will directly affect asset quality. This comes on top of existing weak asset quality across banks and some NBFIs, and under-capitalisation in the banking system, which are likely to continue to hamper the growth and funding of the NBFI sector.

The agency recently revised down India's GDP growth forecast for the fiscal year ending March 2021 (FY21) to 5.1 per cent, from 5.6 per cent previously, and the risks are skewed to the downside as the authorities attempt to contain the virus.

Published on March 28, 2020

A letter from the Editor


Dear Readers,

The coronavirus crisis has changed the world completely in the last few months. All of us have been locked into our homes, economic activity has come to a near standstill. Everyone has been impacted.

Including your favourite business and financial newspaper. Our printing and distribution chains have been severely disrupted across the country, leaving readers without access to newspapers. Newspaper delivery agents have also been unable to service their customers because of multiple restrictions.

In these difficult times, we, at BusinessLine have been working continuously every day so that you are informed about all the developments – whether on the pandemic, on policy responses, or the impact on the world of business and finance. Our team has been working round the clock to keep track of developments so that you – the reader – gets accurate information and actionable insights so that you can protect your jobs, businesses, finances and investments.

We are trying our best to ensure the newspaper reaches your hands every day. We have also ensured that even if your paper is not delivered, you can access BusinessLine in the e-paper format – just as it appears in print. Our website and apps too, are updated every minute, so that you can access the information you want anywhere, anytime.

But all this comes at a heavy cost. As you are aware, the lockdowns have wiped out almost all our entire revenue stream. Sustaining our quality journalism has become extremely challenging. That we have managed so far is thanks to your support. I thank all our subscribers – print and digital – for your support.

I appeal to all or readers to help us navigate these challenging times and help sustain one of the truly independent and credible voices in the world of Indian journalism. Doing so is easy. You can help us enormously simply by subscribing to our digital or e-paper editions. We offer several affordable subscription plans for our website, which includes Portfolio, our investment advisory section that offers rich investment advice from our highly qualified, in-house Research Bureau, the only such team in the Indian newspaper industry.

A little help from you can make a huge difference to the cause of quality journalism!

Support Quality Journalism
This article is closed for comments.
Please Email the Editor
You have read 1 out of 3 free articles for this week. For full access, please subscribe and get unlimited access to all sections.