In a bid to ease persistent stress in the non-banking financial company (NBFC) sector, the Reserve Bank of India (RBI) has relaxed rules for NBFCs to sell or securitise their loan books. The RBI stated that NBFCs can now securitise loans of more than five-year maturity after holding those for six months on their books. Earlier, they had to hold these assets for at least one year.
Though, it said that the relaxation on the minimum holding period will be allowed when the NBFC retains 20 percent of the book value of these loans. NBFCs are facing stress on their balance sheets after a debt crisis hit a large infrastructure funding company in September, triggering panic amongst investors and a cash crunch in the sector.
Besides, the RBI and the government have taken many steps to ringfence the crisis and support financing needs of the sector, including providing additional liquidity to banks and credit enhancement for refinancing needs, following the massive volatility in the financial markets.