NBFC-MFIs seek clarity from RBI on 3-month moratorium on loans

RBI seeks data on drawdowns, bank loans, exposure to NCDs and CPs

Non-banking financial companies operating as microfinance institutions (NBFC-MFIs) have sought clarity from Reserve Bank of India (RBI) on whether they are eligible for the three-month moratorium on loan repayments announced by the central bank on March 27.
 

“There is still confusion among banks on whether they should extend the moratorium to NBFCs. We have asked the RBI to clarify the position on this matter,” said Manoj Nambiar, chairman, Microfinance Institutions Network (MFIN), a self-regulatory organisation of the sector.
 

Senior MFI executives contend that while they have extended the moratorium to their customers, the same hasn’t been extended to them by some of their lenders. Instead, they were directed to meet their short-term liquidity needs through the targeted long-term repo operations (TLTRO) route.
 

On March 27, the RBI opened up the TLTRO option for NBFCs in addition to allowing well-rated corporates to tap bank funding through market instruments, such as commercial papers and non-convertible debentures. However, this option is primarily available to top-rated companies, with AAA and above rating. “There are hardly four-five MFIs with even A rating,” said a source.

MFIs haven’t had access to funds since March 23, and this has been communicated to the RBI. “In the last 10 days, we have not had any disbursals. We haven’t received money through collections or bank loans, but we have had to meet our repayment obligations,” said Padmaja Reddy, managing director, Spandana Sphoorty Financial.
 

In response to these representations, the RBI reached out to MFIs last Sunday, asking them to furnish information on their bank-wise loan outstanding, amounts drawn down and unutilised lines of credit, and share of CPs and NCDs issued by banks to MFIs. Industry sources say these data points have been furnished to the RBI and a clarification is awaited.