Lenders want SBI to include NBFCs under moratorium

SBIThe moratorium allows deferral of loan interest servicing and repayment for three months. The Reserve Bank of India (RBI) notification and the subsequent FAQ from the industry lobby IBA does not specifically exclude NBFCs from the moratorium. However, an internal SBI circular says that currently financial intermediaries, NBFCs, housing finance companies and micro-finance institutions will not be covered, a senior banker told ET.

Several lenders are trying to convince the trade big daddy State Bank of India (SBINSE -0.78 %) to cover non-banking finance companies (NBFCs) under the moratorium as part of the COVID-19 relief package. RBI covers a large part of the instalments of NBFCs due over the next three months… if the banks give such a facility to non-bank lenders their own liquidity could come under pressure. The banking industry’s loan outstanding to NBFCs is about Rs 12 lakh crore (about 12 % of the total loans). A large part lies in the books of SBI. It will not make sense to extend the moratorium to NBFCs without SBI’s participation.

NBFCs’ sources of funds are capital market instruments like non-convertible debentures (NCDs) and more recently external commercial borrowings. There is no moratorium on traded securities NCDs while offshore lenders extending ECBs are unwilling to give any relief. If they have no collections from loans, some of them will need special liquidity lines. This facility was offered during the 2008-09 financial crisis though it was never used.

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