Govt, RBI done all that they could for NBFCs: SBI chief Rajnish Kumar

Government, RBI, NBFC, SBI chief, Rajnish Kumar, banking news, industry news, Reserve Bank of India, RBI,  NBFC sector

SBI chief Rajnish Kumar (File Photo)

The government and the banking regulator have done all they could to ease the flow of credit to non-banking financial companies (NBFCs) and it is now up to banks to implement the policies laid out, State Bank of India (SBI) chairman Rajnish Kumar said on Monday.
Speaking at Fibac 2019, an annual event organised by the Federation of Indian Chambers of Commerce & Industry (FICCI) and Indian Banks’ Association (IBA), Kumar said: “Consultations are on (with regard to the stimulus package) with bankers and different industries. I think the government and the Reserve Bank of India (RBI) have done all they could for NBFCs. So, it is now only the execution and the rollout by the banks or the lenders.”

There is nothing further the government can do, Kumar said, adding that there is liquidity, partial credit enhancement and interest rates have moderated. Asked about the progress made in the resolution of stressed NBFC Dewan Housing Finance (DHFL), Kumar said: “That you should ask the company.”

Banks will continue to do all that is required to maintain financial stability in the system, he added. “The (RBI) governor has spoken about financial stability and as a lender, as a bank, whatever contribution is required from us, we will make that contribution.” Earlier in the day, RBI governor Shaktikanta Das said that the NBFC sector complements the banking sector and aspires to act as a bridge to provide last-mile connectivity. Further, niche NBFCs fulfil the unmet and exclusive credit needs of infrastructure, factoring, leasing and other such activities. Non-traditional and digital players are now entering this space to deliver financial services by way of innovative methods involving digital platform. There is a web of inter-linkages of the NBFC sector with the banking sector, capital market and other financial sector entities.

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“The RBI keeps a close watch on these inter-linkages to ensure financial stability. With a view to strengthen the sector, maintain stability and avoid regulatory arbitrage, the Reserve Bank of India and the government have been proactively taking necessary regulatory and supervisory steps,” Das said in his address at the event. “It is our endeavour to have an optimal level of regulation and supervision so that the NBFC sector is financially resilient and robust. We will not hesitate to take whatever steps are required to maintain financial stability in the short, medium and long term.”

Das ruled out the possibility of carrying out an asset quality review (AQR) of NBFC books along the lines of what was done for banks in 2015-16. “At the moment, there is no such proposal to have an AQR. While saying that, let me also add that the top 50 NBFCs and HFCs (housing finance companies) are being very closely monitored by us. The monitoring is going to be inclusive. All aspects are being looked into, including their capital adequacy, their stability, their cash inflow-outflow and so on,” the governor said.

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