RBI not looking at liquidity facility for NBFCs: Dy Guv N S Vishwanathan
Bank of India (RBI) has ruled out any special liquidity facility for Non
Banking Financial Institutions (NBFCs) saying there is enough in the system to
meet their needs for borrowings and it is for the lenders to take a call on
lending to the NBFCs.
"Reserve Bank's position is that there is adequate liquidity in the system and it is for the lenders to take a view on which borrower to give money to and I do not think at this moment we are looking at a liquidity facility for NBFCs", RBI deputy Governor N. S. Vishwanathan said in an analyst meet after the Monetary Policy Committee (MPC) meeting.
was responding to a question that in the financial markets, there is an extreme
lack of confidence to lend to below AAA names and the liquidity problems faced
by such entities could create further stress on financial system, impede
monetary transmission and affect growth.
Post a fraud at PMC, analysts wanted to know if there are any changes in the annual review process of banks or NBFCs that RBI proposes to make or any specified proposed changes and if that will be effective for ongoing annual review of financial year 2019.
RBI said there will be revamp of its regulatory and supervisory structure and creating a specialized cadre for this.
has decided to revamp its regulatory and supervisory structure and creating a
specialized cadre. Offsite supervision as well as analytical vertical is being
strengthened, and for NBFC supervision, we have strengthened all the core
pillars- onsite supervision, offsite market intelligence and statutory auditor
angle", Deputy Governor M. K. Jain said.
a question on the steps RBI is taking to ensure stability of financial system
in the country and see the solvency of some of the housing finance companies,
Jain said, "RBI makes periodic assessment of risk and vulnerability of the
financial system to shocks emanating both from domestic and external adverse
developments and takes mitigating steps to enhance its resilience. Such
assessments are published twice a year in the financial stability report. The
vulnerability arising out of interconnectedness between banks and non-banking
financial institutions also forms part of the assessment".
RBI recently put a draft circular on the Liquidity Risk Management Framework for NBFCs and Core Investment Companies (CICs) to be adopted by all deposit taking NBFCs; non-deposit taking NBFCs with an asset size of 100 crore and above for stronger Asset Liability Management (ALM) framework in the NBFCs.
In addition, the draft proposes to introduce Liquidity Coverage Ratio (LCR) for all deposit taking NBFCs; and non-deposit taking NBFCs with an asset size of 5000 crore and above.
With a view to ensuring a smooth transition to the LCR regime, the proposal is to implement it in a calibrated manner through a glide path over a period of four years commencing from April 2020 and going up to April 2024.
www.economictimes.indiatimes.com dt. 09.10.2019