Tough life ahead for NBFCs as RBI set to tighten liquidity mismatch limits

Banks have to show how they propose to finance the gap to bring the mismatch within the prescribed limits

The Reserve Bank of India (RBI) is set to impose new limits on the liquidity mismatches that non-banking financial companies (NBFCs) operate with as part of its plan to nudge them towards more stable sources of funding. 

The new guidelines, expected to be introduced in a phased manner, will cover both systemically important non-deposit taking, and all deposit taking entities, and take into account the sectors they operate in. The regulator will thus align NBFCs’ asset-liability mismatch norms with those of banks, which are stricter. 

A relook is underway into the cumulative mismatches, or the negative gap (the difference between