Non-banking financial companies (NBFCs) have already made provisions for non-performing assets and do not expect a sharp spike in bad loans following the Supreme Court verdict.
“Most companies were already making provisions for. All of us were prepared and we don’t see a significant quantum jump or change happening to that extent,” said Raman Aggarwal, Co-Chairman, FIDC, and Independent Director, Paisalo Digital, on Wednesday.
Responding to questions at a virtual press meet by the Finance Industry Development Council (FIDC), NBFCs said they have made provisions for NPAs, but hope the additional relief is provided from the Centre.
Most NBFCs and lenders have already applied for the earlier round of relief that was given to borrowers, they said, adding that they are yet to get it.
“It is an ex-gratia relief, we have filed our claims,” Aggarwal explained.
Meanwhile, NBFCs also reported improvement in collections and continued demand post the Covid-19 pandemic and lockdown.
“NBFCs are adequately capitalised, although there may be some pressures on smaller firms,” said Ramesh Iyer, Chairman, FIDC, VC and MD, Mahindra Finance, adding that collections have also improved on a month-on-month basis.
FIDC has also given suggestions on the discussion paper by the Reserve Bank of India on revised regulatory framework for NBFCs.
“FIDC welcomes the tiered approach,” said KV Srinivasan, Director and CEO, Profectus Capital, adding that it has highlighted the issue of smaller NBFCs and minimum capital requirement.
“Based on increase in prices, real GDP and regulatory judgement, the entry point norms will be revised from ₹2 crore to ₹20 crore,” the discussion paper had proposed on the minimum net owned funds.
Srinivasan said it has been suggested that this should be extended and companies with less than ₹2 crore capital should be given sufficient time to reach the threshold.