Banks lending more to NBFCs, not to let any big one to fall, says RBI
Mumbai: The Reserve Bank is closely monitoring the troubled shadow banking sector and will not allow any large non-banking financial player to collapse, governor Shaktikanta Das said on Thursday.
The governor also said credit flow to the NBFC sector, especially to those better managed ones, have increased in recent months but did not quantify by how much.
The top 50 NBFCs, which represents 70 percent of the market, are being monitored closely and intensely by the supervision team of the central bank, Das said.
"The Reserve Bank, wherever necessary, will not hesitate to act to ensure that we do not allow any large or systemically important NBFC to collapse and create any adverse impact on the system," Das told reporters at the post-policy press conference.
The NBFC sector has been in liquidity crisis since the collapse of IL&FS in September 2018.
The governor also said the central bank is making a deep dive into the books of the top 50 NBFCs and has gained a fair idea of where the vulnerabilities lie and has also identified the most vulnerable of them.
The central bank is also meeting the managements and promoters of large NBFCs at periodic intervals.
"Discussions are being held between RBI, promoters and managements of NBFCs. We clearly tell them what are our expectations and suggest measures they should undertake to strengthen their processes and systems so that they get out of the crisis," Das said.
The liquidity situation among NBFCs for at least three months is also being monitored. "I can say credit flow is slowly reviving among NBFCs, especially the better performing ones which are able to access fund from the market at pre- IL&FS rate," he said adding the market is also differentiating between the good and the not-so-good NBFCs.
Talking about the crippled mortgage-lender DHFL, which became the first NBFC on Tuesday to get into bankruptcy proceedings, Das said the role of the RBI starts and ends with referring it to the NCLT and thereafter insolvency professional and committee of creditors will take over.
"We cannot add greater disruption and uncertainty to the system. The regulator is best placed to assess the current state of affairs in a NBFC, identify the vulnerable entities and refer them to NCLT. It is a pragmatic decision which underlies the notification issued by the government under the IBC code," he said.
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