Economics · Financial Risk Management
NBFCs often face Asset-Liability Management (ALM) challenges due to their business model. What is the most common ALM mismatch faced by infrastructure finance NBFCs (NBFC-IFCs) in India?
- 1Funding long-term infrastructure assets with short-term borrowings (liquidity risk).✓
- 2Having too many assets in foreign currency (exchange risk).
- 3Holding too much cash reserves (high liquidity risk).
- 4Excessive reliance on equity financing over debt financing (capital risk).
Correct answer
Funding long-term infrastructure assets with short-term borrowings (liquidity risk).
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