Non-banking financial companies (NBFCs) on Wednesday knocked at the Centre’s doors seeking a credit line or a ‘liquidity window’ to restore confidence in the sector and help energise the credit market.
They also submitted that ‘systemically-important’ NBFCs should be allowed to access public deposits and more licences should be granted to those aspiring to be banks.
These were among the suggestions that came up at a meeting the NBFC honchos had with Prime Minister Narendra Modi in the Capital.
Chief executives of seven NBFCs and housing finance companies were part of a delegation that was led by Assocham President Balkrishan Goenka.
Financial Services Secretary Rajiv Kumar was also present at the meeting.
The meeting assumes significance, as it is the first that with the NBFC sector at the Prime Minister’s level after the IL&FS blowout.
At the interaction, the NBFC chiefs reportedly said that though there was no default crisis post the IL&FS implosion, sentiment has certainly taken a hit and this could be addressed with a credit line from the government or the RBI.
Need for support
“It’s important that the NBFCs are provided support at this juncture. It’s more of trust building that is required. With today’s meeting at the highest level, we are confident that steps will be taken in the next few days on this front,” Balkrishan Goenka said.
Sunil Kanoria, Vice-Chairman, SREI Infrastructure Finance, said that the main problem is that the NBFCs are slowing and some are facing a balance-sheet degrowth.
Balance-sheet degrowth
“We are keen on the liquidity window so that the confidence is restored and the credit market is energised. The liquidity window can come from either the government or the RBI,” Kanoria said.
Raman Aggarwal, Chairman, Finance Industry Development Council, told BusinessLine that a case was also made for tweaking the Mudra norms for refinancing of NBFCs.
“This will also give a tremendous boost to the growth of Mudra in meeting its objectives. The Mudra portfolio is heavily skewed towards the sub-₹2-lakh category. There is lack of focus in the ₹2-10 lakh category, which is addressed by small NBFCs,” he said.