https://www.businesstoday.in/bt-buz...ubble----bursting-in-phases/story/341923.html Liquidity woes to worsen The problems with the NBFC sector began in September last year when the infrastructure finance company IL&FS defaulted on payments to banks, term deposits and failed to meet the commercial paper redemption obligations. It caused panic in the markets as it impacted banks, MFs as well as investors. Since then, the source of funding for NBFCs has been drying up and they are finding it increasingly difficult to service repayment obligations. The downgrading of Anil Ambani group companies follows redemption delay by two fund houses -- Kotak Mahindra Asset Management and HDFC Mutual Fund - in April this year. The two MFs said they will not be able to redeem all their units due to delay in recovering money lent to the Subhash Chandra-led Essel Group companies. "Now, there will be a certain set of companies, which will just not get lending due to their weak balance sheets. Asset quality consciousness is coming now and fund managers are no more chasing only numbers. So availability of liquidity will go down," says Jharna Agarwal, Head - Products, Preferred Business, at Anand Rathi. Liquidity will be impacted more than the cost of funding because if a lender does not find a company making it to the cut, they will just not lend now. "No amount of interest rate will be enough for lending in such cases," she adds.