NBFC execs bat for more rate cut

Written by feBureau | Mumbai | Updated: Apr 10 2013, 05:54am hrs
Non-banking finance companies (NBFCs) executives on Tuesday requested the Reserve Bank of India (RBI) for a cut in the cash reserve ratio (CRR) at the next annual monetary policy on May 3.

At a customary pre-credit policy meeting with RBI, Finance Industry Development Council (FIDC), the apex body of NBFCs, urged for a cut, in line with the view of bankers, who have said that currently due to liquidity crunch, CRR cut will be more effective in lowering lending rates.

We expect not much change in the interest rates in this policy, but definitely the CRR, may be reduced by 0.25%, FIDC director general Mahesh Thakkar told reporters after meeting RBI officials. CRR is currently at 4%, after the 25 bps cut in the January policy, while repo rate is at 7.5%.

Three RBI deputy governors KC Chakrabarty, HK Khan and Urijit Patel met executives from companies like Shriram Capital, Mahindra Finance and L&T Finance. In the meeting, the executives also asked RBI to reconsider the cut-off for NPA classification at 180 days against the proposed new norms of 90 days and the tier-I capital requirement of 7.5% to be continued.

In draft guidelines based on the Usha Thorat Committee report, RBI wants to bring NBFCs at par with banks, in terms of the 90-day non-performing asset classification norm.