RBI can facilitate provision rule, NBFC to obtain funds

Mayur Shetty | TNN

Mumbai: Lenders, both banks and non-banks, are likely to receive relief on the provisioning requirements of the Reserve Bank of India (RBI) with non-bank financial companies (NBFCs) for additional relief in terms of financing. Reducing the provisioning requirement will allow lenders to provide relief to borrowers without harming their own finances. On Monday, the governor and other top officials had separate talks with representatives and mutual funds.

The governor recognized the role of financial intermediaries and tried to understand the problems they face. NBFC representatives said the two main problems facing the industry are the availability of financing and the need to restructure loans, as the ability to pay among borrowers has been affected. With the mutual funds, they discussed the issue of a lack of presence in the bond markets, which was hampering MF's operations.

Speaking to TOI, an NBFC executive director said the RBI has ensured that banks are free to extend a moratorium on financial companies and some have already done so. He added that the State Bank of India is also likely to review its stance on extending the moratorium to financial companies. SBI did not respond to a TOI inquiry.

Sources said some lenders have already started offering a moratorium on NBFCs. The RBI also tried to monitor the liquidity position of financial companies given the extent of the blockade. And with risk aversion among banks to lend to NBFC, non-bank lenders have suggested that the RBI channel funds through the Small Industries Development Bank of India (Sidbi).

We ask the RBI to allow a single window for the restructuring of all loans. Currently, this service is available for loans to MSMEs and could now also be considered for all other borrowers, given the environment. This restructuring can kindly be allowed without the need for 5% provisioning as mandated by the current scheme, ”said Mahesh Thakkar, CEO of the Financial Industry Development Council (), an association of non-bank lenders. In February, the RBI had allowed lenders to restructure loans to micro, small, and medium-sized enterprises (MSMEs) due to tension in the sector. He said borrowers would require more than a three-month moratorium to return to normal.

Last week, the IFCD had written to the finance minister seeking a partial government guarantee scheme of up to Rs 1 lakh crore for banks' purchase of priority sector assets and the provision of credit lines. credit through development institutions such as Sidbi, Nabard and the National Housing Bank.