Das assures all help to troubled NBFCs, HFCs

The Reserve Bank is closely monitoring the troubles brewing in the NBFC sector due to the liquidity crisis and will take all measures to ensure financial stability, governor Shaktikanta Das said Thursday. The comments come in the backdrop of the default on bond repayment by Dewan Housing Finance, which is the third largest pure-play mortgage player, and the resultant rating downgrades of its Rs 850 crore commercial papers to default grade by Crisil and Icra.

"The RBI has been very closely monitoring the activities, performance and the development in the non-banking finance companies, including the housing finance companies," Das told reporters at the post-policy presser. The governor also said the central bank is monitoring all major non-banking and housing finance companies.

Stating that the RBI is committed to ensuring a robust and well-functioning NBFC sector, Das said, "the central bank will not hesitate to take whatever steps are required to ensure that the financial stability is not adversely impacted in any manner by any development." The governor said the periodicity of NBFC supervision, which was 18 months earlier, has now been brought down to 12 months now. "Every year there is an inspection of NBFCs. Major entities are also being very closely monitored by RBI. So, we will not delay taking any action, if and when, it is required," he assured.

Das said RBI's supervision mechanism has been very robust and from time to time many aspects for supervision report, which are available to the central bank, are shared with the individual entities with a specific direction to place it with their boards. "So, the RBI expects the boards of these companies to take necessary action based on our supervision reports. The compliance of the supervision reports are also monitored during subsequent inspections," the governor said, adding fine-tuning and improving the supervision and regulation is a continuous process.

Recently, RBI had announced the formation of a specialised cadre to strengthen regulation and supervision of banks, NBFCs and other financial institutions. Mortgage lender DHFL defaulted interest payment of bonds which matured on June 4. Following this, Icra and Crisil downgraded its Rs 850 crore CPs to default or D from A4. The company has CP worth Rs 750 crore maturing this month with the first repayment being this Friday.

"With liquidity inadequate as on date to service debt and visibility very low on timely fundraising, we expect the CP to be in default on maturity," Crisil had said in a note. The delay in interest payments on June 4 by DHFL has impacted the net asset values of debt funds of various mutual fund houses.

DHFL and other NBFCs are facing funding issues post a series of default by IL&FS since last September. When asked about the charge-sheet filed by the Serious Fraud Investigation Office in case of IL&FS, which had said timely intervention by the RBI could have averted the crisis, Das said, "we don't have access to that charge-sheet. We are also not aware of the same. If it is referred to us by any authority we will look at it."