IBA writes to RBI for seeking answers over the NBFC loan moratorium issue, banks haven’t reached a consensus

Indian Banks Association (IBA), after having a detailed symposium with the management committee of banks, have resolved to write to the Reserve Bank of India (RBI) to find out a precise answer in concern of the lenders on providing moratorium to the non- banking finance companies (NBFC).

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However, State Bank of India (SBI) instead of giving moratorium to the NBFCs have decided to let them borrow under the Targeted Long Term Repo Operations (TLTRO) window. Though the other banks are of the opinion that this would lead them to further subjection towards these NBFCs. They said this provision can be used for their growth and development.

Keeping in mind this controversy, IBA will be formulating a study of 20-25 NBFCs and analyse their financial condition, repayment capacity and report this to RBI the following week.

The RBI regulations on the postponement of of loans does not keep out the non-banking financial companies or other financial institutions like NABARD, National Housing Bank and Sidbi.
On Friday, RBI Governor Shaktikanta Das issued new initiatives to make provisions for liquidity assistance to the NBFC section.

The NBFCs take loans from the banks and further lend them to other sectors like automobiles, to retailers, to small business owners etc. Infrastructure Leasing and Financial Services Ltd. have reneged on its payment policy since they have started facing inadequate liquidity. This has created unrest among the non- banks concerning the cancellation of their extension of moratorium.

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