To enhance liquidity for NBFCs, HFCs, CII suggests easing of certain norms

Industry body CII on Tuesday recommended easing of certain norms for enhancing liquidity for non-banking financial companies (NBFCs) and housing finance companies (HFCs).

It has suggested to ease ECB norms with a higher limit for investment grade-rated companies equivalent to sovereign rating up to maybe USD 1,500 million from the current uniform limit of USD 750 million for all NBFCs.

It has also asked for relaxation of end-use norms of external commercial borrowings (ECBs) for HFCs to facilitate credit flow to the entire housing finance sector.

Currently, end-use is limited to affordable housing, the chamber said in a statement.

Further, CII recommended that the Reserve Bank of India (RBI) should define a framework for lender of the last resort for them having an asset book size of more than Rs 25,000 crore.

Unlike banks, it said these types of companies do not have the repo window facility to borrow in times of need.

"CII has suggested that the RBI should look at creating a separate classification within the systemically important NBFCs based on asset book size," it said.

NBFCs and HFCs have played a complementary role to banks in supplying credit to the underserved segments of t CII logo he economy, it said.

Citing RBI data, it said that for 2018-19, the share of credit from banks, NBFCs and HFCs was in the ratio of 70:30.

"NBFCs and HFCs are important source of financing and will play a key role in taking the Indian economy to USD 5 trillion," it added.