New Delhi: Reserve Bank of India (RBI) has started monitoring the operations of the non banking finance companies (NBFCs) following the budgetary decision to incentivize banks for buying NBFC assets.
“We are monitoring NBFCs and their operations at regular intervals,” the RBI Governor, Shaktikanta Das told newspersons Monday after the customary post-budget meeting with Union finance minister, Nirmala Sitharaman.
Sitharaman, during his Budget speech on the floor of the Parliament on July 5, 2019, announced that the Union government will provide a one- time partial credit guarantee to public sector banks (PSBs) high- rated pooled assets of NBFCs.
Das Monday said that after the meeting that the system has sufficient liquidity and the Budget for 2019-20 has made provision for shadow banking (NBFC) sector.
He also applauded the budgetary provision of Rs 70,000 crore towards bank capitalization to boost the flow of credit. “This is an extremely positive development that will help lenders not just comply with the regulatory requirement but also step up banking,” the apex bank governor added.
Even global rating agencies like S&P applauded the proposed Rs 70,000 crore capital infusion by government into PSBs. “We believe the capital infusion will help PSBs make necessary haircuts on their weak corporate loans and shore up their capital adequacy,” said S&P Global rating credit analyst Geeta Chugh.
Das also said that RBI will discuss with the Union government over issuance of overseas sovereign bonds with the government.
On interest rate transmission, Das said that although it used to take up to six months for an interest rate cut to be transmitted to consumers but things have improved. “Now it is taking shorter time,” he said.
According to him, of the 50 basis points cut in interest rate announced by the RBI prior to the June monetary policy, about 21 basis points had been transmitted. “We are hoping better transmission of interest rate cuts in coming weeks and months,” he said.
Sitharaman, however, refused to field questions from media persons, when asked about the budgetary proposal to raise the surcharge for super- rich and said that she would prefer to respond on the floor of the Parliament.
