Finance Industry Development CouncilAn association of NBFCs has said that the new rules are in the interest of banks and NBFCs and will provide additional safeguards, but they will cause additional harm to small businesses. We request RBI to re-evaluate the sharp increase in assigned risk weight. To provide bank loans to NBFCs. “This measure has the potential to inadvertently sharply reduce the flow of credit to MSMEs, self-employed and other sectors that are dependent on credit from NBFCs.”Mahesh ThakkarDirector General, FIDC,
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FIDC appreciated the RBI’s decision to implement measures addressing the high growth in certain components of consumer credit. It also supported the effort to distinguish between consumption-oriented loans and loans for industrial and commercial development.
“This will redirect credit flows towards capital expenditure and help in greater inflow of funds to meet the working capital needs of MSME and self-employed sectors in particular,” the representation said.
While the RBI has increased the risk weight on consumer loans for all lenders, it is a double whammy for finance companies as the RBI has also increased the risk weight on bank loans to NBFCs. This will also make it difficult for NBFCs to sell their loans to banks.
“Loan sales by personal loan NBFCs stood at around Rs 1,150 crore in FY23 and had already crossed Rs 800 crore in H1FY24,” it said. Abhishek DafriyaSenior Vice President of ICRA.
(TagstoTranslate)Business News(T)RBI(T)Mahesh Thakkar(T)Finance Industry Development Council(T)FIDC(T)Abhishek Daffaria