PremiumMUMBAI: Non-bank financiers have urged the Reserve Bank of India (RBI) to allow smaller lenders, with assets less than Rs500 crore, to restructure their loans, helping them overcome possible asset-liability mismatch.
“The only mode of borrowings for the small non-banking financial companies (NBFCs) is to raise term loans from banks, financial institutions…and large NBFCs. They do not access the capital markets and neither do they issue bonds or debentures," Finance Industry Development Council (FIDC), a body representing non-banks, said in a letter to RBI governor Shaktikanta Das on Tuesday.
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Premium NBFCs have been plagued by a liquidity crunch since the defaults at Infrastructure Leasing and Financial Services (IL&FS) in September 2018. Covid-19 has only aggravated their woes, considering that while their borrowers were eligible for debt recast, NBFCs were not allowed to restructure their borrowings. This was true for the last round of covid-19 recast allowed by RBI, available for borrowers till 31 December. Meanwhile, in a recent meeting with RBI governor, bank chiefs sought an extension of the one-time debt recast scheme.
Not just for small NBFCs, the industry body on Tuesday also sought an extension of the recast scheme for its borrowers at least till 31 March, 2022. Considering the severity of the second wave of covid-19, retail borrowers, small businesses, and retail and wholesale trading industries shall be in urgent need of support from lenders, it said.
“The borrower accounts, irrespective of whether or not such accounts had been restructured on any earlier occasion and standard as on 31 March 2021, may be allowed restructuring without any downgrade in asset classification, subject however to the lending NBFCs undertaking fresh credit assessment of the borrowing entity," it said.
The letter said the second wave has begun impacting the industry, especially the self-employed segment. With many states like Maharashtra, Chhattisgarh, Madhya Pradesh, Karnataka, Rajasthan and Tamil Nadu already under lockdown or lockdown-like strict conditions, resulting in closure of branches, it is becoming increasingly difficult to reach customers for collections, it said.
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