The Finance Industry Development Council (FIDC), a representative body of asset and loan financing of non-banking finance companies (NBFCs) registered with Reserve Bank of India (RBI), has sought creation of a dedicated refinance body.
At a time NBFCs are expected to demonstrate faster growth in line with the improvement in the economy, stronger balance sheet, higher provisions and improve capital positions in the post-pandemic period, there is a dire need to have a dedicated refinance body to help smaller borrowers, said Kamlesh Gandhi, co-chairman of FIDC.
In view of protecting the unique character of the NBFC model when it comes to harmonisation of regulatory norms with banks and other financial institutions, a dedicated body is required, he said. Considering the high vulnerability of small borrowers, including MSMEs, there is a strong case for having differential prudential norms for them, he said.
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Addressing a press briefing in Ahmedabad, Gandhi, who is also the chairman of MAS Financial Services, said NBFCs are rapidly gaining prominence as intermediaries in the retail finance space. As per India Ratings and Research, NBFCs would maintain a loan growth of around 14% year-on-year in the next fiscal, wherein the growth in the current fiscal is expected at about 7-8%.
“As per Crisil Ratings, vehicle finance, which constitutes nearly half of the assets for NBFCs, will grow 11-13 % in FY 23, against 2-4 % in FY 22 and FY 21. NBFCs finance more than 80% of equipment leasing and hire purchase activities in India…” he said.