ALFS wants rediscount window open for non-bank finance firms

BS Srinivasalu Reddy

Mumbai, Oct 17: Association of Leasing & Financial Services Companies (ALFS) is seeking permission from the Reserve Bank of India (RBI) to open the rediscount window of the banking sector for non-banking finnce companies (NBFCs) involved in bill discounting operations.

“We are expecting revival of rediscount facility by banks to NBFCs offering bill discounting facility, in the forthcoming credit policy. The circumstances have widely changed from the time such facility was banned in the wake of bridge finance scam in 1992,” ALFS executive director Mahesh Thakkar told The Financial Express on Wednesday.

At present, commercial bills are being rediscounted by banks, but not service bills. But with the service sector advertisement, event management and infotech coming of age, this is expected to provide business opportunities for NBFCs.

Deatiled investments norms for NBFCs are expected to be announced in the credit policy. Already there are overall ceilings, but it may announce the internal limits for various kinds of investment instruments as well. “We are expecting the RBI to come up with reasonable limits in this regard,” Mr Thakkar said.

The assocaiton is also expecting an encouragement from the RBI to the banks to extend auto finanace through NBFCs.

This would result in giving boost to auto finance in the country as the banks would focus on wholesale lending to NBFCs, which in turn would turn retail financiers.