‘Close and intense eye’ on NBFCs

October 5, 2019 3:07 AM

Non-banks came under scrutiny after collapse of Infrastructure Leasing and Financial Services last year that led to intervention from the government.

NBFC, Reserve Bank of India, Shaktikanta Das, financial markets, Religare Finvest, Finance CorporateThe fall of these institutions have had a ripple effect across financial markets, hurting banks, mutual funds and retail bond holders with exposure to the sector.

By Mitali Salian

The Reserve Bank of India is keeping a ‘close and intense’ eye on the top non-banking financial companies (NBFCs) to ensure there isn’t another failure a large systematically important entity. RBI governor Shaktikanta Das, speaking at a post-policy conference on Friday said, “We are monitoring them and wherever required we are calling the management of those NBFCs, having dialogue with them and taking issues forward, how to resolve issues. And in some cases, I mentioned, the banks are also signing ICA as per June 7 circular and trying to sort of restructure that loan.”

Non-banks came under scrutiny after collapse of Infrastructure Leasing and Financial Services last year that led to intervention from the government. Since then, other non-banking financial companies, including Dewan Housing Finance Corporate, Religare Finvest and Altico Capital India Limited, have witnessed stress and defaulted on repayment obligations. Some of these institutions have also been hit with accusations of misgovernance.

The fall of these institutions have had a ripple effect across financial markets, hurting banks, mutual funds and retail bond holders with exposure to the sector.

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