RBI Issues Fresh Guidelines For On-Lending By NBFCs

The Reserve Bank of India issued fresh guidelines that would allow banks to increase their exposure to non-banking financial companies by permitting on-lending for the priority sector.

Credit to NBFCs has remained constrained after the IL&FS crisis in September last year and disbursements by NBFCs have fallen across almost all categories. The central bank and the government have taken measures to revive credit flow. These measures include harmonising risk weights to NBFCs with those of other corporates, increasing prudential limit on bank exposure to NBFCs to 15 percent from 10 percent, bringing down minimum holding period for assets to be securitised to six months from one year and other measures to improve liquidity.