The Reserve Bank of India assures it’s ready to help NBFC’s if needed

The Reserve Bank of India assures it’s ready to help NBFC’s if needed

Highlights

  1. RBI has advised NBFCs to adjust to the present condition
  2. Shaktikanta Das (RBI Governor) held a meeting with lenders from NBFCs
  3. RBI has promised to hold such a meeting once every six months
  4. The meeting was conducted in the presence of three representative governors Viral Acharya, NS Vishwanathan, and MK Jain.
  5. Discussion key points liquidity, mudra, and structured dialogues

RBI has advised NBFCs to adjust to the present condition of liquidity even as the sector lobbies for bank loans at simpler terms for lending to the small and medium enterprises sector which is known for making jobs. Shaktikanta Das (RBI Governor) held a meeting with lenders from NBFCs on 9th Jan as well as discussions issues that are troubling the sector. From the discussion, they raised the issue of higher borrowing cost from the bank's spite of the fact that the liquidity situation has been improved from what was in the last month of October or November. The meeting was conducted in the presence of three representative governors Viral Acharya, NS Vishwanathan, and MK Jain. In addition, Deputy Senator Viral Acharya clarified surplus liquidity after the money boycott in November 2016 as an abnormality. While the business delegates sought regulatory intervention to guarantee cash available for such non-banking entities, According to a person present in the meeting“The Reserve Bank of India assured them of the same “as per and when it needs”. “From now onwards window of special liquidity has been ruled out”. RBI has promised to hold such a meeting once every six months.

The inflation-targeting central bank, in fact, presently likes to keep liquidity in slightly shortfall mode. The industry body has pitched for Mudra loans for smaller shadow banks, which have small wherewithal to tap the capital market to fund-raise. They looked for some unwinding on such government plans, which should empower those organizations to avail credit. Typical bank credit lines have turned out to be costly with the acquiring cost bouncing around 100-150 basis points for those organizations.

As per Raman Aggarwal, chairman of Finance Industry Development Council (FIDC) “We have discussed three points’ liquidity, mudra, and structured dialogues. The governor was receptive enough. The Reserve Bank of India is expected to consider broader points.”