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Ramesh Sharma

For better recovery: Mr M.S. Verma (left), former Chairman, SBI & TRAI, and Dr Amit Mitra, Secretary General, FICCI, at a press conference in the Capital on Wednesday. –

Our Bureau

New Delhi, Aug 6 The Federation of Indian Chambers of Commerce and Industry task force on non-banking financial companies (NBFCs) said that the sector should be treated at par with banks.

It has recommended measures, including the setting up of a debt recovery tribunal, removing restrictions on overseas borrowings and on issuing hybrid financial instruments for meeting regulatory capital needs.

“It is time that they (NBFCs) are not looked upon as weak links in the system and are given a regulatory treatment in keeping with that perception,” the former SBI Chairman, Mr M.S. Verma, who headed FICCI’s task force on NBFCs, said while releasing the panel’s report.

Acknowledging that NBFCs are efficient tools of providing credit to needy customers, FICCI said a debt recovery tribunal should be set up for recovery of their bad loans as they are already resource-strapped.

“The Government may consider increasing the number of debt recovery tribunals if the existing set-up is found inadequate.

This would be necessary to strengthen the recovery mechanism for NBFCs, which are already resource strapped,” the report said.

He also said the increase in capital adequacy ratio to 12 per cent would severely impact the small NBFCs.

“The move to increase the capital adequacy requirement for NBFCs from 10 per cent to 12 per cent is detrimental.

“This would kill the small NBFCs which are doing well,” Mr Verma added.

More Stories on : NBFCs | Industry Associations

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