Tuesday, April 28, 2020

Aviation, jewellery sectors face high credit risks, says report

Mumbai: Aviation and gems and jewellery sectors face high credit risks due to the current business disruptions and prolonged recovery caused by the COVID-19 crisis, according to a report.

Besides these two sectors, microfinance institutions (MFIs) and tourism and hotels industries also face high credit risks, according to the report by ICRA Ratings.

It said that because of the COVID-19 crisis, the credit profile of a large number of sectors and entities has become vulnerable.

"The high-risk sectors -- aviation, gems & jewellery, tourism & hotels, microfinance institutions -- are the ones that face severe business disruption over the immediate term and where the recovery is more likely to be prolonged," the rating agency''s Head (Credit Policy) Jitin Makkar said.

The medium-risk sectors that include automobile OEMs (original equipment manufactures) and auto-ancillaries, construction, consumer durables and power, among others, face relatively lower degree of business disruptions and credit risks.

The rating agency, however, expects that the after-effects of the COVID-19 crisis on these sectors may not persist for long.

The sectors that face low risk are agri-products, education, fast-moving consumer goods (FMCG) and telecom.

"These industries are unlikely to face material business disruption, or a material increase in credit risks over the near term, triggered solely by the COVID-19 crisis," Makkar said.
28/04/20 PTI/Outlook
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