Spotlight turns to stressed NBFCs
A day after announcing a bailout package for stressed housing projects, the government has turned its attention on NBFCs which are also in a perilous state. It aims to open a special debt resolution window for stressed entities in the sector.
The current status of the NBFCs was discussed at the meeting of the Financial Stability and Development Council (FSDC), which was chaired by finance minister Nirmala Sitharaman and attended by regulators and senior govenment officials. FSDC is the apex body of sectoral regulators.
“Even today, we have quite a good number of NBFCs. A large number of NBFCs are well-functioning, which are able to access funds from the market and loans from the banks. Some of them have got overseas funding also,” RBI governor Shaktikanta Das said.
The RBI is closely monitoring the top 50 NBFCs, which represent roughly 75 per cent of the asset size of the sector.
Finance ministry officials said the government is mulling a special window for the resolution of stressed NBFCs under the Insolvency and Bankruptcy Code.
The plan is to come out with some mechanism to deal with financial service providers which require some resolution under an alternative framework pending the Financial Resolution and Deposit Insurance (FRDI) Bill or some specific provision coming in place, the official said.
A notification in this regard will be issued soon, the official added.
Sebi order to MFs
Sebi on Thursday directed mutual funds to create segregated portfolios of unrated debt in case of default as the watchdog seeks to curb instances of distressed assets .
The directive comes against the backdrop of liquidity woes in the NBFC sector raising concerns about mutual fund investment in them.
Sebi in a circular said it has decided “to permit creation of segregated portfolio of unrated debt or money market instruments by mutual fund schemes of an issuer that does not have any outstanding rated debt or money market instruments”.