NBFCs will have to maintain liquidity coverage ratio, says RBI

This will help them meet short-term obligations so that they can survive any acute liquidity crisis

The Reserve Bank of India (RBI) on Monday introduced its liquidity management framework for cash-strapped non-banking financial companies (NBFCs). 

The apex bank has said that NBFCs have to now maintain a liquidity buffer of high quality liquid assets to meet short-term obligations so that they can survive any acute liquidity crisis. 

The RBI has mandated non-deposit taking NBFCs with an asset size of Rs 10,000 crore and all deposit taking NBFCs irrespective of the asset size to maintain a liquidity buffer in terms of liquidity coverage ratio (LCR) from December 1, 2020. LCR is the proportion of high liquid assets set aside