"Over the years, liquidity has been a recurring challenge for NBFCs, especially for a large number of small and medium-sized NBFCs. Sources of funding like public deposits and external commercial borrowings have been restricted. The recent concerns on the over dependence on banks for funding have further added to the liquidity concerns," FIDC director Raman Aggarwal said in the memorandum to the finance minister. "During our interaction, the management at Sidbi has conveyed their willingness to take up this role," Aggarwal said.The Reserve Bank of India has several times in the recent past voiced concerns over NBFCs' "over-dependence" on banks for funding. "This harmonisation has only resulted in making the regulations ‘more stringent’.

Source: Economic Times June 21, 2024 08:57 UTC