Single borrower limit facility for NBFC sector extended by 3 more months

The Reserve Bank of India Friday extended the enhanced single borrower limit facility for NBFC sector by another three months to provide much-needed liquidity support. Earlier in October, the regulator had increased the single borrower limit for NBFCs (not financing infrastructure) from 10 per cent to 15 per cent of capital funds. This facility was valid till December 31, 2018.

"In order to further facilitate banks to lend to NBFCs and HFCs as indicated above, it has been decided to extend the aforesaid facilities up to March 31, 2019," the RBI said in a notification. As a result, a bank can give loans to the extent of 15 per cent of its capital fund to a particular non-banking finance company (NBFC) or Housing Finance Company (HFC). The move will help provide liquidity to NBFCs, which have come under pressure following a series of default by IL&FS group companies.