Reserve Bank of India (RBI) Governor Shaktikanta Das, on Monday, took stock of the liquidity situation of Non-Banking Finance Companies (NBFCs), including MicroFinance Institutions (MFIs) and Mutual Funds, with industry representatives.
This stock-taking exercise comes in the backdrop of small- and mid-size NBFCs and MFs facing liquidity constraints, in view of the reluctance of banks to invest in the debt instruments issued by the NBFCs and purchase debt instruments from MFs.
Despite RBI providing special liquidity facilities to banks to encourage them to specifically invest in the debt instruments and help NBFCs and MFs tide over liquidity tightness, they are risk averse, as credit risk dues to investment in these instruments will be on their books.
In the case of NBFCs, the RBI top brass assessed post-lockdown strategies for supply of credit, including working capital, to MSMEs (micro, small and medium enterprise), traders, and bottom of pyramid customers in semi-urban, rural, and urban areas.
They also reviewed implementation of the three-month moratorium on repayment of loan instalments announced by the RBI and strengthening the grievance redressal mechanisms
While NBFCs have implemented the moratorium for their customers, they are not getting the same treatment for their borrowings from banks. In the case of MFs, the RBI brass reviewed the functioning of the bond markets and their plans for the way forward.
The RBI, in statement, said the Governor acknowledged the critical role NBFCs, including MFIs, play in delivering last mile credit, and the importance of MFs in financial intermediation.
Das held meetings with the representatives of NBFCs and MFs in two separate sessions through video conferencing. The meetings were attended by Deputy Governors and other senior officers of the RBI.