Tuesday, June 22, 2021
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Restructure retail & individual loan accounts, liquidity support: FIDC to RBI

The Finance Industry Development Council ( FIDC) a Representative Body of Non Banking Financial Institutions (NBFCs) has called upon the Reserve Bank of India to allow a one time restructuring of customer loan accounts, even those restructured in the covid wave one and now standard & standstill on buckets for restructured accounts for Q1FY22.

There is a need to Restructure Loans to Small NBFCs by Banks and FIs (asset size of less than 500 crore) and the Liquidity support to NBFCs for on-lending to MSMEs, to increase the overall support outlay to AIFIs from Rs 50000 crores to at least Rs. 75000 crores, and additional support exclusively to medium and small NBFCs, through SIDBI for period of 3 years, said FIDC.

The body in a letter addressed to Shaktikanta Das, Governor of RBI, said this was for the interests of retail NBFCs who “primarily cater to the funding needs of MSMEs, truck/taxi drivers, machine operators and marginal farmers and provide loans for acquiring the vehicles/tractors/equipments for productive purposes,” adding that these customers “are mostly new to credit and having very little/no banking history. These are also the customers who earn and pay and therefore most vulnerable in any economic cycle and in the present pandemic, they have been mostly locked down and unable to deploy their assets and make even their two ends meet.

The second wave of COVID-19 has already started impacting the industry, the self-employed segment of customers having little or nothing to fall back upon. With many states like Maharashtra, Chhattisgarh, Madhya Pradesh, Karnataka, Rajasthan, Tamil Nadu & NCR already under lockdown or lockdown-like strict conditions resulting in closure of branches ; it’s a becoming increasingly difficult to reach customers for collections as their business has come to standstill and their livelihoods are under threat. It is feared that this second wave of Covid will peak sometimes in May and then possibly start climbing down in June. It will not be long before the NBFC industry starts reeling under pressure of increased NPAs and at the same time, handling demand of moratorium and/or restructuring from its existing and deserving customers, said FIDC in its letter.

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