FOREX Magazine

The Reserve Bank of India has
further activated additional
funding lines for non-banking
finance companies (NBFCs),
including housing finance
companies (HFCs), by
temporarily relaxing
regulatory prescriptions so
that banks can take higher
exposure to them and also
draw more liquidity under the
so-called ‘liquidity coverage
ratio’.
The twin moves could
encourage banks to lend
more to NBFCs.
They are probably aimed at
ensuring that NBFCs don’t
face any liquidity constraints
in the wake of debt defaults
by IL&FS and some of its arms
and stem any spillover of the
high real estate exposure of a
few HFCs to other NBFCs.
The RBI on Friday upped the
single-borrower exposure
limit for NBFCs that do not
finance infrastructure, from
10 per cent to 15 per cent of
capital funds, up to
December 31. This relaxation
will enable banks to
temporarily take a higher
loan exposure to NBFCs.
G-Sec holdings
This has been permitted
under FALLCR (Facility to
Avail Liquidity for Liquidity
Coverage Ratio) within the
mandatory SLR (statutory
liquidity ratio) requirement.
The central bank also
announced that banks will
be permitted to reckon
Government Securities (G-
Secs) held by them up to an
amount equal to their
incremental outstanding
credit to NBFCs and HFCs,
over and above the amount
of credit to NBFCs and HFCs
outstanding on their books as
on Friday, as Level 1 HQLA
(high quality liquid asset).
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