the only beneficiary will be those into shortterm consumer loans as well as microfinance loans feel the experts industry body assocham saturday hailed the reserve banks decision to incentivise banks to enhance their lending to nonbanking finance companies nbfcs saying the step will help them in tackling liquidity crunchthe rbi on friday allowed the banks to use government securities equivalent to their incremental credit to nonbanking financial companies nbfcs for a threemonth period to meet their liquidity coverage ratio lcr requirementsthe provision will allow banks to free up rs 5000060000 crore of liquidity which banks can lend to nbfcs till december 31 advt this shall also send a message that the recent developments do not indicate any systemic problem but it is merely a case of sentiments having gone wrong after one of the big nbfcs defaulted assocham saidthe industry body said the whole issue of asset liability mismatch is more relevant in case of longterm lending companies like the housing finance companies and infra financing nbfcsa typical nbfc model is a retail lending model with short tenures of 25 years and small ticket sizes where asset liability mismatch is not a concern nbfcs have shown impressive growth for the last few years maintaining a high capital adequacy ratio which is higher than the minimum prescribed levels this growth has also been healthy as reflected in better asset quality assocham saidhowever provision of a dedicated refinance window especially for the large number of small and medium sized nbfcs is very important to ensure future growth it said furtherthe latest measure by the rbi to boost capital flow to nbfcs has been however downplayed by industry players and analysts and described it as too little and too lateaccording to them it will not help much especially to those nbfcs which are into home and auto loansthe only beneficiary will be those into shortterm consumer loans as well as microfinance loans feel the expertsthe nbfcs have come under heavy pressure with their stock prices witnessing sharp fall on the bourses triggered by a series of loan defaults by ilfs group firms about a month ago and has crippled the prospects of smooth credit flow of the sector advt sensing the enormity of the crisis ilfs group which is laden by debt to the tune of rs 91000 crore the government swung into action quickly and took the management control by disbanding its board and replaced it by six newly appointed members headed by banker uday kotak of kotak mahindra bankbesides lic and sbi who are amongest the key stakeholders in ilfs have come to the rescue of ilfs and are expected to infuse capital by raising their respective stakes in the companyseparately countrys largest lender sbi has also announced to buy quality assets worth rs 45000 crore from the nbfcs pti published on oct 20 2018 at 0818 pm ist telegram facebook copy link be the first one to comment comment now comments comment now read comment 1 all comments post post