The liquidity crisis in the Indian NBFC sector

1. Author’s Note

This is my first research paper written for ‘Symposium – The Research Paper Competition’, the flagship event of Insight – NM College’s Business, Finance and Economics Meet. The recent chaos in the Indian Financial Markets and the following liquidity crisis in the country caught my attention to select this topic. The entire paper shows how the entire crisis unfolded and the road ahead for India. I hope this paper gives all the substantial information needed to understand the the commonly stated “NBFC crisis” in the country and what measures have been and may be taken to revive the economy. I would like give special thanks to my advisor Mr. Karan Rajgopal without whom this research paper wouldn’t have been possible. I would also like to show my hearty gratitude to all the faculty, mentors, and peers who gave their valuable inputs and generous advice for the success of the paper.

2. Abstract

This research paper aims at providing an abstract look on the ongoing liquidity crisis in the Indian economy with a special reference given to the Non-banking Financial Companies (NBFCs) by not just looking at this crisis as the ultimate end of the golden days but a new beginning of something even better. It explains the series of events that unfolded the entire crisis with the help of the  IL&FS crisis that created a panic and affected almost every sector and every market of the country. It further explains how the 2008 Financial Crisis and the current liquidity crisis are linked or similar yet not the same, and thus explains how the Indian economy is not very close to a crisis like the one in 2008.

The scope of this paper is heavily dependant on secondary source of information like blogs, articles, and magazines like The Economic Times, The Hindu Business Line, Livemint, Forbes, etc. which is readily available for public access.

3. Introduction

The recent NBFC crisis in India caused a lot of chaos in every segment of the economy. The crisis looked very similar to the 2008 Financial Crisis which had a lot of consequences. The following study on the functioning of the NBFCs, and the comparative analysis between the  causes and effects of the current crisis and the 2008 crisis will help gain great insights on the severity of the ongoing crisis and the effectiveness of the measures taken so far.

Continue reading the research paper…

MSc Finance graduate from the London School of Economics and Political Science (LSE)
Avatar for Ria Vaghela

Ria V Vaghela is an M&A Executive at RSM UK and an MSc Finance graduate from the London School of Economics and Political Science (LSE). She has worked at Jefferies, Dial Partners and 7i Capital prior to RSM UK gaining an experience of about 1.5 years. She has also worked as an Editor and Content Writer for The Representative Media. Apart from finance, she is interested in reading books on psychology and economics and also likes to paint and play lawn tennis


  1. Very good work. Go on. Best of luck. Best efforts should be circulated.

  2. […] Indian Banking Sector, struggling with rising NPAs since 2016, followed by the NBFC crisis in 2018, and the COVID-19 lockdown, is grappling to maintain adequate liquidity. The measures taken […]

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