INSUBCONTINENT EXCLUSIVE:
KOLKATA: The government and the Reserve Bank of India are likely to arrive at a common ground over easing of liquidity crunch for
non-banking finance companies, while state-run banks cannot become a perfect substitute for funding medium and small enterprises, DBS Bank
liquidity, said a person close to the central bank
economist Radhika Rao said in a note
She expects more regulatory changes for NBFCs, particularly on the funding make-up for non-bank entities to limit pipeline systemic
Data suggested that NBFCs have returned to banks and rupee-debt markets to raise funds, albeit at a higher cost, lowering the reliance on
short-term borrowings.
But their liabilities are likely to get re-priced more often than assets (particularly shorter-tenor borrowings),
posing refinancing challenges
One of the litmus tests will be the upcoming commercial paper maturities, in the region of Rs 1.0-1.5 lakh crore in in the fourth quarter of
The PCA rules have crippled credit availability with non-PCA banks going for higher due diligence, she said, while noting that banks did not
have the reach to rural pockets where NBFCs enjoyed a competitive advantage.
