RBI’s P. Vijaya Bhaskar said that regulating NBFCs was more difficult than banks due to their diversified activities

Mumbai : The Reserve Bank aligned loan restructuring norms of NBFCs with those of banks so as to minimise risk of defaults. RBI said instructions on restructuring of advances by NBFCs have been reviewed on the lines of the recommendations of the Mahapatra committee report on prudential guidelines for banks and financial institutions.

As a result of this move, there is now a harmonisation of corporate debt restructuring (CDR) norms across the financial sector.
For NBFCS, RBI said, mere extension of Date of Commencement of Commercial Operations (DCCO) up to a specified period, will not tantamount to restructuring for infra, non-infra and CRE (Commercial Real Estate) projects.
It added: “Special asset classification benefit will be made available to CDR and consortium cases including SME debt restructuring mechanism, apart from infrastructure and non-infrastructure project loans subject to certain conditions.”
The benefit will however be withdrawn with effect from April 1, 2015 with the exception of provisions related to changes in DCCO in respect of infrastructure as well as non-infrastructure project loans.
Meanwhile, Reserve Bank of India Executive Director P. Vijaya Bhaskar said regulating non-banking financial companies was more difficult than banks due to their diversified activities.
“NBFCs are a bigger regulatory challenge for regulators than banks… the reason is very simple because you do so many types of activities which are really very difficult for a regulator to bring into a rule book and try and put them in everything,” Bhaskar said at a conference organised by ASSOCHAM.
He said the industry needed a single representative body on the lines of the Indian Banks Association to address its issues. NBFCs grew 24.3% during Mar 2007-Mar 2013, as against banks’ growth of 21.4%, he said. Bhaskar said micro, small and medium enterprises could provide a huge
opportunity for the NBFCs to cash in on. -Cogencis/PTI

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