RBI rules out credit line for NBFCs, discusses revised bad loan circular

The original 'resolution of stressed assets' framework created a huge rift between the government and the RBI, and perhaps led to the exit of Urjit Patel as governor

The Reserve Bank of India (RBI) board on Tuesday suggested not extending a credit line to struggling non-banking financial companies (NBFCs) because it felt there was no systemic liquidity issue but there were solvency concerns in some large entities.

The board, headed by RBI Governor Shaktikanta Das, met in Chennai and discussed the NBFC crisis as well as a revised circular that would replace the controversial “resolution of stressed assets” framework released by the central bank on February 12, 2018.

The RBI is working on a liquidity framework for the NBFC sector and that may be released soon. Though an