Money & Banking

FIDC hails RBI’s booster dose for NBFCs

K.R.Srivats New Delhi | Updated on August 07, 2019 Published on August 07, 2019

Central bank measures on priority sector lending, increase in bank exposure limit to NBFC will enhance fund flow to the sector, says FIDC Chief Aggarwal

The Finance Industry Development Council (FIDC) — a representative body of NBFCs — has welcomed the RBI’s measures to enhance credit flow to the NBFC sector.

“This is a big victory for FIDC. We have been raising the priority sector issue with the Government at the highest levels including PM, FM and RBI Governor since December last year”, Raman Aggarwal, Chairman, FIDC told BusinessLine here.

The RBI on Wednesday in its latest monetary policy review allowed bank lending to registered NBFCs (other than MFIs) for on lending to agriculture (investment credit) upto ₹10 lakhs, MSMEs upto ₹20 lakhs and housing upto ₹20 lakh per borrower (up from ₹10 lakh at present) to be classified as priority sector lending.

This concept of bank lending to NBFCs for onward lending to various sectors being categorised as priority sector lending was there till 2011. This facility was removed in 2011 and now being restored, but with certain specified sectors such as agriculture, MSME and housing. “This RBI move will improve fund flow to NBFC sector,” Aggarwal said.

Besides the priority sector move, RBI also today raised the bank’s exposure limit to a single NBFC to 20 per cent of Tier-I capital of the bank. It was 15 per cent earlier.

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Published on August 07, 2019
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