Corporates Seek Fresh Rules As Nbfcs Reel Under Cash Crunch

Presiding over the meeting held at the PHD house, J Krishnatrey charged the banking sector and financial institutions with not extending enough credit to NBFCs.

The participating members said maximum permissible bank finance was not being worked out in accordance with the Reserve Bank of India's norms.

They urged the authorities to initiate steps to smoothen the flow of credit to NBFCs.

In this regard, Krishnatrey informed the members, the Federation of Merchant Bankers and Finance Companies' suggestion to the government to reduce the statutory liquidity ratio (SLR) from the then 15 per cent to ten per cent.

However, the statutory liquidity ratio was reduced to only 12.5 per cent. The ratio must be further sliced by 2.5 per cent, the group said.

 

He said a strong resource base for NBFCs can be built by freeing interest rates totally without any limitations to the period of deposits.