RBI Opens Banking Tap To Ease Liquidity Crunch At NBFCs: ASSOCHAM
The ASSOCHAM welcomes RBI's move to incentivize banks to enhance their lending to NBFCs as a step in the right direction which would enable NBFCs to tackle the liquidity crunch. This shall also send a message that the recent developments do not indicate any systemic problem but it is merely a case of sentiments having gone wrong after one of the big NBFCs defaulted.
The whole issue of Asset liability mismatch is more relevant in case of long-term lending companies like the Housing Finance companies and Infra Financing NBFCs.
A typical NBFC model is a retail lending model with short tenures of 2 to 5 yrs and small ticket sizes where the asset-liability mismatch is not a concern. NBFCs have shown impressive growth for the last few years maintaining a high capital adequacy ratio which is higher than the minimum prescribed levels. This growth has also been healthy as reflected in better asset quality.
However, provision of a dedicated refinance window, especially, for the large number of small and medium-sized NBFCs is very important to ensure future growth.