"Further, illiquid Corporate Debt Market and DHFL saga may force AMCs to sell government securities. Hence, the government securities would face a huge selling pressure so either Bond Yield will shoot up to 8.30-8.50 per cent levels or the RBI has to do OMO (open market operations). "If RBI opts for OMO, then the government's spending capacity will reduce by an equal amount," it had said.DEA said that NBFC licenses could be cancelled also. "Primary market in Corporate bonds has completely dried up as no one is willing to bar currently in expectation of further redemption from MF's," it added.Though IL&FS group is not inconsequential, but exposure of the banks to the NBFC sector is about 16 per cent. It has appointed retired Supreme Court judge Justice D K Jain to supervise the entire process.

Source: Economic Times February 16, 2020 09:45 UTC