NBFCs ask RBI for extended recast scheme and more liquidity support

As the impact of the second wave of COVID-19 infections starts to play out, non-banking financial companies (NBFCs) have asked RBI to allow a fresh round of loan restructuring for businesses and consumers undergoing stress. In a letter to RBI, Finance Industry Development Council (FIDC) has also sought liquidity support for on-lending to small businesses.

FIDC, in its representation, said, “It is feared that this second wave of COVID will peak sometimes in May and then possibly start climbing down in June. It will not be long before the NBFC industry starts reeling under pressure of increased NPAs and at the same time, handling demand of moratorium and/or restructuring from its existing and deserving customers.”

It also explained that a large number of borrowers in the NBFC segment are truck or taxi owners/drivers, machine operators, marginal farmers, small shopkeepers, stockists, local contractors and workshop owners. These categories of professionals are being hit by localised and state-wide lockdowns mandated in parts of the country.

The industry has requested that borrower accounts be allowed to undergo restructuring without any downgrade in asset classification, irrespective of whether they had been restructured on any earlier occasion as long as they were standard accounts as on March 31, 2021.

FIDC also suggested that the RBI could look to prescribe broad parameters for credit assessment of such accounts on the lines of recommendations made by the KV Kamath committee. This would help standardise the approach followed by lenders. They have also sought a standstill on asset classification of restructured accounts in Q1FY22.