New Delhi, Oct 20 (UNI) The apex industry body Assocham on Saturday welcomed the Reserve Bank of India (RBI)’s move to incentivise banks to enhance their lending to non-banking finance companies (NBFCs) as a step in the right direction which would enable NBFCs to tackle the liquidity crunch.
The body said: “This shall also send a message that the recent developments do not indicate any systemic problem but it is merely a case of sentiments having gone wrong after one of the big NBFCs defaulted.”
The whole issue of asset liability mismatch was more relevant in case of long term lending companies like the housing finance companies and infra financing NBFCs.
A typical NBFC model was a retail lending model with short tenures of two to five years and small ticket sizes where asset liability mismatch was not a concern. NBFCs have shown impressive growth for the last few years maintaining a high capital adequacy ratio which is higher than the minimum prescribed levels. This growth has also been healthy as reflected in better asset quality.
The Assocham added that however, provision of a dedicated refinance window, especially, for the large number of small and medium sized NBFCs was very important to ensure future growth.