NBFCs with Rs 500 cr assets can go for insolvency

New Delhi: The Reserve Bank can now seek resolution of non-banking financial companies having assets worth of at least Rs 500 crore under the insolvency law, a move that is likely to help in addressing woes in the NBFC sector.

After discussions with the central bank, the corporate affairs ministry on Monday issued a notification specifying the categories of financial service providers (FSPs) that can be taken up for resolution under the "generic framework" of the Insolvency and Bankruptcy Code.

On Friday, the ministry notified the framework for dealing with systemically important FSPs, excluding banks, under the Code wherein sectoral regulators can seek resolution of stressed entities.

The introduction of the "generic framework" comes against the backdrop of the ongoing liquidity crisis in the non-banking financial companies (NBFCs) that has also sparked concerns about overall stability of the financial

sector.