State Bank of India (SBI) has decided to give select Non-Banking Financial Companies (NBFC) a three-month repayment holiday, persons familiar with the development said. The decision was taken at an executive committee meeting on Wednesday.
The lender had initially decided to refrain from offering shadow banks the breather but a meeting with Reserve Bank of India (RBI) late last week, appears to have led it to relent.
The total exposure of banks to NBFCs at the end of March 30 was Rs 8.07 lakh crore, 26% higher than in the year-ago period, a little less than a tenth of the non-food loan portfolio of banks of approximately Rs 90 lakh crore. According to Crisil, NBFCs need to repay loans to the tune of Rs 1.75 lakh crore by June, 2020. The ratings agency said recently less than a fourth of NBFCs were short of liquidity cover to be able to repay their dues.
Banks have been cautious about lending to NBFCs and even microfinance institutions. Although the regulator had offered banks a Rs 25,000 crore low-cost line of credit -TLTRO2.0 – to invest in NBFCs and MFIs, banks borrowed just Rs 12,850 crore. This was despite the breather on priority sector lending against the funds invested, a measure that would have allowed banks to earn a better yield on their loans. NBFCs have been asking for a repayment holiday as they have offered one to their borrowers. RBI had, on March 27, allowed lenders to defer repayments of borrowers who had taken term loans by three months.
SBI will also help NBFCs with special loans of Rs 50-200 crore for a tenure of up to five years. Among other banks that have agreed to a repayment moratorium for NBFCs is Bank of India, another public sector bank.