Sensex Opens Marginally Up; Telecom & Power Stocks Gain

A major reason for this is the gain in market share from public sector banks (PSBs). The recent NPA woes of the PSBs has seen them tighten up their credit lines.

The NBFCs have stepped in, along with private sector banks, to fill this gap.

But the recent liquidity crisis at IL&FS has raised concerns over how long this growth will continue.

Such a liquidity crisis will increase lending costs for NBFCs. Once borrowing costs rise for NBFCs, their profitability is bound to take a hit.

One way to counter that would be to raise their lending rates. But then, it would make them less competitive as compared to banks.

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Disclosure: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. ...

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