RBI eases lending norms for NBFCs

Mumbai, October 19

The RBI on Friday eased lending norms related to certain non-banking finance companies (NBFCs) as liquidity concerns in the sector persist and markets continue to question the viability of some of the firms following the IL&FS debacle.

The RBI permitted banks to use government securities equal to their incremental outstanding credit to NBFCs, over and above their outstanding credit to them as on October 19, to be used to meet liquidity coverage ratio requirements.

The move will help provide liquidity to housing finance companies (HFCs) and NBFCs which have come under pressure following series of default by IL&FS group companies. “... banks will be permitted to also reckon government securities held by them up to an amount equal to their incremental outstanding credit to NBFCs and HFCs, over and above the amount of credit to NBFCs and HFCs outstanding on their books as on October 19, 2018, as Level 1 HQLA under FALLCR within the mandatory SLR requirement,” the RBI said.

This will be in addition to the existing FALLCR of 13 per cent of total deposits, and limited to 0.5 per cent of the bank’s total deposits. Liquidity coverage ratio refers to highly liquid assets that financial institutions need to hold in order to meet short-term obligations. The additional window will be available up to December 31, 2018.

Besides, it said, the single borrower exposure limit for NBFCs which do not finance infrastructure stands increased from 10 per cent to 15 per cent of capital funds, up to December 31, 2018.

The RBI has been undertaking open market operation at regular intervals to add liquidity. — PTI

NO separate watchdog  for payments system

The RBI on Friday made public its dissent note on certain recommendations of a government panel on changes to payment and settlement laws and said the regulation of payments system should remain with the central bank. The inter-ministerial panel to finalise amendments to the Payment and Settlement Systems Act, 2007, suggested the creation of an independent regulator Payments Regulatory Board to deal with payments related issues. “There is no case of having a regulator for payment systems outside the RBI,” the note stated.