BIZ-RBI-NBFC-ACHARYAPTI | Mumbai | Updated: 05-12-2018 16:44 IST | Created: 05-12-2018 16:44 IST
Measures over the last two months
have eased liquidity for NBFCs and there is no necessity for
the RBI to extend help to the crisis-hit sector as a lender of
last resort, deputy governor Viral Acharya said Wednesday.
The central bank is guided by the principle of
addressing system-wide liquidity requirements, Acharya said,
the non-banking finance companies (NBFCs).
"The RBI also stands ready to be the lender of last
resort but that is provided conditions warrant that sort of an
extreme measure. In our assessment, there is no such necessity
at the present," he said at the customary press conference
after the fifth bi-monthly policy review.
Acharya said the "sound health" of the economy, where
the credit growth is comfortably above the nominal GDP growth
with a fair distribution across sectors, make the RBI
confident that such support will not be required.
The RBI has also augmented system-wide liquidity
through various moves, he said.
According to reports, the government has been wanting
measures like a special liquidity window for the NBFCs, which
employ crores of people. There was no mention of the NBFC
sector in a press statement issued by the regulator after a
marathon board meet last month.
Acharya said the RBI has been watching developments on
this front since late-August and has also been in touch with
Sebi to understand the potential redemptions.
It can be noted that the IL&FS crisis burst out in
late August, and the worries quickly spread to other NBFCs and
the possible asset liability mismatches that they may face,
which had made investors cagey.
said banks can raise more against the collateral of government
securities for onlending to NBFCs and housing finance
companies (HFCs) and the concentration limits have also been
risk transfers within the financial system. This can be
considered as reintermediation across financial players or
risks. We believe this is healthy for financial stability
overall," he said.
Measures on partial credit enhancement (PCE) to aid
bond raising by NBFCs and also liberalisation on the
securitisation front are a part of these measures, he said.
"Our assessment is that these measures have
collectively eased the funding stress in a steady manner over
the past two months. They have given the NBFCs and HFCs time
and the opportunity to make their own balance sheet
adjustments on both assets and liabilities side," he said.
In comments directed at analysts who have wondered the
efficacy of some of the moves, he explained these measures
were chosen from the full "set of available options" based on
an analysis of the reasons behind the funding stress for NBFCs
Acharya said it was the recognition of asset quality
issues in the banks, which led to a greater play by the NBFCs
in the financial system.
Rating agency Crisil Wednesday said NBFCs' asset
growth is expected to halve to around 10 per cent in the
second half of the current fiscal on difficulties in getting
funding for the sector.
(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)
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