The resolution for stressed non-banking financiers will have to be determined by a market-led mechanism, Reserve Bank of India Governor Shaktikanta Das said.
Such a mechanism, Das said while speaking to financial market participants at the India Economic Forum organised by Bloomberg in Mumbai today, will have to factor in inflows through stake sales, bringing in new promoters or securitisation of assets.
“NBFCs where there are major governance issues, banks will have to take larger haircuts,” Das said talking about the sacrifice bankers will have to make during resolution of such assets.
The central bank governor said while there are genuine cases of business failures in the NBFC sector, there were still instances of administrative negligence observed. To correct these situations, banks, according to Das, will have to take a more balanced call.
The RBI is currently monitoring 50 of the top NBFCs and large housing financiers, which account for 75 percent of outstanding loans. If and when a situation arises, the RBI will use its newly availed powers of forcing change in management and other measures.
The NBFC sector has been facing considerable liquidity issues since for nearly a year, since the IL&FS Group crisis. Banks are currently in the process of finalising resolution plans for non-bank lenders such as Dewan Housing Finance Corporation Ltd., Altico Capital India Pvt. Ltd. and Reliance Home Finance Ltd.
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