RBI cancels certificates on 121 NBFCs since October 22

Mumbai, Oct 25 (KNN) In the last four days, the Reserve Bank of India (RBI) has cancelled the certificates of as many as 121 Non-Banking Financial Companies (NBFCs).

On October 22 certificates of 30 NBFCs were cancelled, while on October 23, 24 and 25 certificates of 31, 30 and 30 NBFCs were cancelled respectively.

The move comes days after RBI eased liquidity norms for banks in order to release additional funding for NBFCs.

NBFCs have been under pressure recently due to fears of a liquidity crisis, high valuations and asset liability mismatches

The crisis triggered after Infrastructure Leasing & Financial Services Ltd (IL&FS) group defaulted on the payments.

RBI had allowed banks to allocate up to 15% of their lending to NBFCs that do not finance infrastructure projects against 10% earlier. The banks were permitted to use government securities equal to the incremental credit disbursed by them to NBFCs to meet liquidity coverage ratio requirements.

Meanwhile, it is expected that the RBI in its ongoing board meeting in Mumbai will touch upon the liquidity squeeze gripping the NBFCs.