NBFCs seek central bank approval for one-time rejig of loans
RBI had allowed banks and NBFCs to make a one-time restructuring of loans given to micro, small and medium enterprises (MSMEs)NBFCs have sought a offer a similar restructuring plan for their borrowers instead of extending the moratorium
MUMBAI : Non-banking financial companies (NBFCs) on Monday asked the Reserve Bank of India (RBI) to allow a one-off loan recast due to the impact of covid-19. Representatives of NBFCs and microfinance institutions met RBI governor Shaktikanta Das and deputy governors via videoconference to assess the impact of RBI’s measures on their operations.
RBI had allowed banks and NBFCs to make a one-time restructuring of loans given to micro, small and medium enterprises (MSMEs). The scheme was extended to 3 December. NBFCs have sought a offer a similar restructuring plan for their borrowers instead of extending the moratorium.
Extension of moratorium could lead to moral hazard and could spoil the repayment culture, they said. They also asked RBI to ensure that banks offer back-to-back moratorium to NBFCs. On 27 March, the central bank had announced a three-month moratorium for all term loans. While NBFCs have extended this facility to their borrowers, not all banks have extended this facility to NBFCs.
NBFCs also suggested a three-year funding from the Small Industries Development Bank of India and National Bank for Agriculture and Rural Development instead of a one-year product they were offering currently.
“NBFCs would require liquidity in these uncertain times. Customers are not expected to bounce back and volumes are also not expected in full force in the coming months. Hence, there is a need for a one-time restructuring," said Ramesh Iyer, vice-chairman and managing director, Mahindra and Mahindra Financial Services Ltd, who attended the meeting.
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