RBI staff studies on NBFCs call for more policy help to avoid systemic risk

While the RBI has done a number of liquidity enhancing measures, and the government has also come up with credit guarantee schemes, the issue in hand is clearly that of solvency

Two studies done by staff at the Reserve Bank of India (RBI) on non-banking finance companies (NBFCs) recommended more support for the sector to avoid systemic risk. They also advise mutual funds to improve liquidity by investing more in government securities, in the absence of a robust corporate bond market, to tide over redemption pressures. 
 
The studies are not the view of the central bank, but are important as these could later help crystalise the RBI’s view on the matter. 
 
The studies were authored by Yaswant Bitra, Manish Meena, and Anubhav Agarwal of the Financial Stability Unit, and