The Hindu : Business : RBI to prepare roadmap for strengthening NBFC sector

Online edition of India's National Newspaper
Saturday, Mar 26, 2005

Business

Business

RBI to prepare roadmap for strengthening NBFC sector

By Our Corporate Reporter

CHENNAI, MARCH 25. The Reserve Bank of India is looking at further strengthening the non-banking finance companies (NBFC) so as to help the sector grow in terms of its asset base. The central bank had given an option to NBFCs to move voluntarily out of public deposits acceptance activity if they found that the regulatory costs outweighed their benefits. If NBFCs chose to get out of public deposits, the RBI would help them in their efforts, including imparting training and technology support, Y. V. Reddy, Governor of the Reserve Bank of India, told the Finance Industry Development Council (FIDC), a representative body of NBFCs.

The council met the Finance Minister last week with the objective of working out a three-year perspective for the NBFC sector. According to a release from the Reserve Bank of India, the representatives of the NBFCs appreciated the role of the RBI in regulating the sector. The representatives urged the RBI that NBFCs should be viewed as complementing the banking sector and not competitive as NBFCs played a significant role in financing road transport and infrastructure and could also reach the grassroots level through micro finance. According to the RBI release, the representatives mentioned that for regulations, they were on a par with players, such as banks, financial institutions and housing finance companies. They should have a level field with housing finance companies in matters such as funding from banks and access to refinancing institutions such as SIDBI and NABARD.

The RBI release further said that the representatives of NBFCs urged that provisions of Debt Recovery Tribunal Act and the SARFAESI Act available to banks and housing finance companies could be extended to NBFCs to protect their assets.

The release said V. Leeladhar, Deputy Governor, A. V. Sardesai, Executive Director, and other senior officials of the RBI were also present at the meet.

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