Mumbai: The RBI welcomed the government intervention in the IL&FS crisis as a “timely move” which has “helped stabilise the situation” at the infra lender, and offered full help to the new management. The regulator is also looking at strengthening the guidelines to avoid situations of asset liability mismatches by non-bank lenders, especially infrastructure financing NBFCs dependent on short term liabilities like commercial papers.
“The well-structured institutional measures taken by the government in the IL&FS case have been timely and appropriate. These have helped stabilise the situation and RBI will engage with the new management if necessary on assistance on its efforts going forward,” Governor Urjit Patel said.
Asserting that the NBFC sector is “overall quite strong”, deputy governor NS Vishwanathan hinted at additional efforts to ensure they do not have to undergo asset liability mismatches (ALM) in the future. “We are looking at strengthening…there is an ALM guideline for them, but we are looking at strengthening them so that we can avoid rollover risks going forward,” he said.
Vishwanathan explained that in the past two years, there has been a rapid increase in the number of NBFCs and their asset growth and these have been depending on diverse sources for their resources, including the short-term commercial papers which expose them to ALM issues, especially the infra-focused ones. He acknowledged that there is an “anxiety” on the sector but said the central bank is “closely monitoring” developments in the sector.
