Srei’s fall and the sorrysaga of shadow lenders

What is the news? After the 2018 collapse of IL&FS and 2019 collapse of DHFL, the Reserve Bank of India (RBI) has added the Kolkata-based Srei Group to the country’s list of failed non-bank lenders. The regulator superseded the boards of two non-banking financial companies (NBFCs), Srei Infrastructure Finance Ltd and Srei Equipment Finance Ltd.… Continue reading Srei’s fall and the sorrysaga of shadow lenders

Economic Survey suggests ‘dynamic health index’ for NBFCs to ensure crisis alert

News:The Economic Survey has suggested the use of a ‘health score’ index for non-banking finance companies(NBFCs). Facts: About Health Score Index: The proposed Health Score Index will aim to provide an early warning signs for liquidity crisis in a non-banking finance company(NBFC) to tackle the problem of financial fragility. The Index will use key financing… Continue reading Economic Survey suggests ‘dynamic health index’ for NBFCs to ensure crisis alert

Asset Liability management(ALM) Framework for NBFC’s

News:The Reserve Bank of India(RBI) has introduced ‘liquidity management framework’ for Non-Banking Financial Companies (NBFCs). Facts: Why this framework? This framework is introduced due to liquidity crunch faced by some NBFCs after the collapse of the Infrastructure Leasing and Financial Services(IL&FS) group. About the framework: The framework has introduced the liquid­ity coverage ratio(LCR) for Non-Banking… Continue reading Asset Liability management(ALM) Framework for NBFC’s

Govt exempts NBFCs, listed firms from debenture reserve requirements

Government has removed Debenture Redemption Reserve(DRR) requirement for listed companies,Non banking financial companies (NBFCs) and Housing finance companies(HFCs). At present,these companies have to set up a DRR to the tune of 25% of the value of their outstanding debentures.However,banking companies and financial institutions are already exempted from creating DRRs. This move will make it cheaper… Continue reading Govt exempts NBFCs, listed firms from debenture reserve requirements

Government issues guidelines for ₹1 trillion partial credit guarantee for NBFCs

Government has operationalised a partial guarantee scheme announced in the budget for non-banking and housing finance companies(NBFCs and HFCs). The scheme provides for a one-time partial credit guarantee to Public sector banks(PSBs) for purchase of pooled assets of financially sound NBFCs. The scheme aims to address temporary asset liability mismatches of otherwise solvent NBFCs/HFCs without… Continue reading Government issues guidelines for ₹1 trillion partial credit guarantee for NBFCs

Banks’ exposure limits, lending norms eased for stressed NBFCs

The Reserve Bank of India (RBI) has announced several measures to enhance credit flow to the cash-starved non-banking financial companies (NBFC) sector. The RBI has raised any bank’s exposure limit to a single NBFC from the existing 15% to 20% of tier-1 capital.This will ease liquidity pressure in the NBFCs. RBI has also allowed bank… Continue reading Banks’ exposure limits, lending norms eased for stressed NBFCs

‘Slowdown evident, may be temporary’

HDFC Chairman has said that the economic slowdown in India which has been due to weakness in consumption demand is temporary in nature and will pick up at the onset of the festive season. According to data released by the Central Statistics Office (CSO),India’s quarterly GDP growth has declined to 5.8% in the January-March 2019… Continue reading ‘Slowdown evident, may be temporary’

NBFCs with big realty loans must rebalance books: RBI

The Reserve Bank of India(RBI) has asked non-banking finance companies(NBFCs) to bring down their lending to the real estate sector. In the finance sector,the National Housing Bank has also been keeping a watch on lending to real estate sector by finance companies.Banks too have scaled down their lending to this segment. Despite facing a credit… Continue reading NBFCs with big realty loans must rebalance books: RBI

Rise in government borrowings might have triggered NBFC crisis

RBI Deputy Governor has expressed the possibility that the rise in government borrowings might have led to the asset-liability mismatch in the non-banking financial companies(NBFC) sector. In the case of NBFCs,the ability to borrow long-term comes down when government borrowing rises increasing the risk of financial stability. This has led to the crisis in finance… Continue reading Rise in government borrowings might have triggered NBFC crisis

RBI Governor, state-run bank CEOs discuss slow rate transmission

The Reserve Bank of India Governor has discussed the issues of banking sector with the officials of Public sector banks(PSBs) and Indian Banks Association(IBA). During the meeting,the issue of less than desired level of transmission of monetary policy rates was discussed with the banks.Even though the RBI has cut the Repo rate by 75 basis… Continue reading RBI Governor, state-run bank CEOs discuss slow rate transmission