Rating Nbfcs

The Khanna Committee, set up to design a supervisory framework for non-banking finance companies, has recommended that the registered NBFCs should be put on three different supervisorywatchlist.

Although the Khanna panel has recommended a rating system for companies having a net worth of Rs one crore, a bulk of them would make this job impossible.

As there are approximately 13,000 to 14,000 companies in the above-mentioned section, monitoring them effectively would not be an easy task.

As such, it makes more sense to concentrate on monitoring the top 100 companies from where maximum amount of deposits are mobilised.

Similarly, supervision of fund deployment would be a difficult task as deployment of assets in finance companies is in far-flung areas.

Besides, the number of times a company is being inspected will be dependent on the risk weightage of the company under the new supervisory rating system to be evolved by the apex bank.

The entire process of rating is a mammoth task as it will have to see compliance with RBI norms. And finance company heads are wondering whether it is feasible.