Closely Monitoring Operations Of Non-Bank Lenders, Says RBI Governor Das
The RBI is closely monitoring NBFCs based on their size and past repayment behaviour regularly, Governor Shaktikanta Das says.
The Reserve Bank of India is closely monitoring non-banking financial companies based on their size and past repayment behavior at regular intervals, Governor Shaktikanta Das said on Monday.
Liquidity is in surplus in the financial system from June 1, and the central bank will support banks if they face a liquidity crunch, Das told reporters in Delhi after Finance Minister Nirmala Sitharaman’s address to RBI’s central board.
Sitharaman said in the budget last week the government will provide a one-time six-month partial credit guarantee to public-sector banks for first loss of up to 10 percent on high-rated pooled assets of NBFCs.
The RBI later said it would front-load steps to ensure more liquidity to banks for on-lending to NBFCs. Under the ‘Facility To Avail Liquidity for Liquidity Coverage Ratio’, the RBI intended to give banks an option to generate additional liquidity of up to 1 percent of the deposit base, linked to incremental lending to NBFCs and housing financiers.
India’s NBFCs are undergoing a liquidity crunch emanating from lack of trust in the sector after the payment defaults at Infrastructure Leasing & Financial Services Ltd. last year. The crunch has resulted in increased cost of borrowing for NBFCs.
Das said there’s a “broad understanding” on the dividend amount the central bank will give to the government for its financial year ending June 30, but it would be premature for him to specify the same.
The government has budgeted Rs 90,000 crore as dividend from RBI. The central bank had transferred an interim dividend of Rs 28,000 crore to the government in February.
A final decision on RBI dividend to the government would be taken by the central bank’s board, Das said.
The board finalised a three-year medium-term strategy document for RBI which covers its mission and vision statement, the central bank said in a statement. Issues related to currency management and payment systems were discussed, it said.