Rejig of NBFC rules
RBI governor Shaktikanta Das on Saturday said there was a need to have a fresh look at the regulation and supervision of NBFCs and the central bank will come out with guidelines on a liquidity risk management framework soon.
Addressing the 15th Annual Convocation of Post Graduate Diploma in Management at National Institute of Bank Management in Pune, he said, fine tuning and improving supervision and regulation are continuous exercises.
Further, Das said, “Our objective is to harmonise the liquidity norms between banks and NBFCs, taking into account the unique business model of the NBFCs vis-a-vis banks. In this context, the final guidelines on the liquidity risk management framework, which we have proposed recently, will be issued shortly”.
Das said the revised guidelines to deal with stressed assets will improve the credit culture as it provided for additional provisioning, a strong disincentive for delay in starting resolution proceedings.
On Friday, the RBI came out with a revised framework to resolve stressed assets under which lenders have been given a 30-day period to review an account before labelling it as a non-performing asset.
Sunil Mehta, chairman of the Indian Banks’ Association, said the new guidelines will give more freedom to bankers to take decisions.
The power industry, which had challenged the earlier circular, came out in support of the new norms. Ashok Khurana, director-general of the Association of Power Producers, said “no mandatory referral to IBC and the new consent threshold is more practical”.
L. Viswanathan, partner at Cyril Amarchand Mangaldas said, the “core of the February 12 circular is intact”.