It is important to recognize that challenges faced by some of the NBFCs were  reflective of inherent fragilities. As financial markets started differentiating between strong/well managed NBFCs and those having perceptible weaknesses, market discipline started to play out - entities with asset-liability mismatches or asset quality concerns faced constraints on market access.
RBI, in response, took several calibrated steps to channel credit flow into the NBFC sector and improve the sector’s long-term resilience. 8. As the sector was slowly inching towards normalcy (as can be seen from Table-1  below), the outbreak of COVID-19 and disruptions in economic activity due to lockdowns led to building up of huge stress in the financial system.