The new capital norms recommended by the RBI panel on NBFCs will not affect Shriram Transport Finance Company, (STFC), its Managing Director, Mr R. Sridhar, told Business Line today.
The proposed increase in tier-I capital to 12 per cent may affect a few other companies in the industry, since it is a bit steep, he said. STFC will manage comfortably because it has a tier-I capital adequacy of 18 per cent and another 6 per cent as tier-2, he said.
Regarding the application of asset classification and provisioning norms of banks to NBFCs, he said that borrowers from the NBFC industry would find this a bit difficult. Currently, NBFCs have a 180-day norm before an asset is recognised as NPA. Banks follow a 90-day norm.
Mr Sridhar said that they would represent to the RBI to give the industry some leeway on this requirement. In the meanwhile, he said, "We'll have to bring more fiscal discipline among our clients. Since the migration is proposed over 3 years or 12 quarters, we are hopeful that we can educate our borrowers also and get them ready."
He welcomed the proposal involving application of SARFAESI Act benefits to NBFCs as well as income-tax benefits for provisions made - which banks currently enjoy. He also said that a number of small NBFCs will go out of the RBI registration net if the recommendations of the working group appointed by the RBI is accepted. He said that based on the 12 per cent capital adequacy requirement, an NBFC with assets of at least Rs 50 crore (proposed threshold) would have to have net worth of Rs 10 crore as against the current minimum networth requirement of Rs 2 crore.