NBFCs to receive more liquidity support as RBI raises exposure limit

This has been done to increase the credit flow to certain sectors which contribute significantly to economic growth in terms of export and employment

The Reserve Bank of India (RBI) has allowed banks’ lending to non-banking financial companies (NBFCs) for on-lending to agriculture, micro and small enterprises, and housing to be classified as priority sector lending, up to specified limits. 

The RBI raised any bank’s exposure limit to a single NBFC from the existing 15 per cent to 20 per cent of tier-1 capital. The idea is to ease liquidity pressure in NBFCs. 

Banks’ lending to NBFCs for on-lending to agriculture up to Rs 10 lakh a borrower will be treated as priority sector lending. 

So, too, for loans up to Rs 20 lakh for micro and