RBI Governor To Meet NBFC, MSME Representatives Next Week

The Reserve Bank of India Governor Shaktikanta Das said he will be meeting the representatives of non-banking finance companies and small businesses next week.

Das already met the heads of state-run banks in two installments, and private sector bankers last month.

The move comes a day after the central bank allowed recast of loans of up to Rs 25 crore for micro, small and medium businesses. NBFCs were reportedly peeved at Das’ predecessor Urjit Patel for not granting an audience to explain problems.

Das took to Twitter to announce the scheduling of the meeting.

Das hinted toward a more conciliatory approach, taking the views of all the key stakeholders on board, hours after assuming charge following the surprise resignation of Patel.

In the run-up to Patel’s resignation last month, the support to MSMEs and the liquidity starved NBFCs was one of the biggest points of friction between government and the RBI.

While the poll-bound Modi government wants to increase credit supply through liberal policies to crucial sectors such as MSMEs, the banking regulator was taking a conservative view and trying to avoid precedents.

The RBI on Tuesday announced the forbearance, months after declaring an end to any sort of loan recasts. Analysts have called the move as regressive which will hurt credit culture.

On NBFCs, the RBI under Patel had made it clear that it was willing to play its part as the lender of last resort but the time was not up to do so.

The central bank attributed the issues at NBFCs to asset liability mismatches, pointing out to reliance on short-term liabilities to fund long-term assets which had come to haunt in a rising interest scenario where rolling over debt became difficult.