FIDC wants NBFCs under SRFAESI

Finance Industry Development Council (FIDC), the self regulatory organisation for non-bank finance companies (NBFCs) in its pre-budget memorandum to the Ministry of Finance, has demanded that NBFCs registered with the RBI, should be covered under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SRFAESI) Act.

FIDC has also demanded that a refinance corporation for the funding of NBFCs engaged in road transport finance should be set up along the lines of that of the National Housing Bank (NHB).] ‘‘NBFCs are faced with an acute shortage of low cost funds with banks shying away from funding NBFCs and stringent prevailing RBI guidelines restricting their access to public deposits,’’ says the note.

On applicability of SRFAESI Act to NBFCs, the paper explains, ‘‘NPAs is a problem common to all lenders in the financial sector, whether they are banks, financial institutions or NBFCs. Prudential norms for asset classification, income recognition, provisions etc, are applicable to NBFCs at par with those for banks and financial institutions.’’

At present, there are no rules/regulations in the country, facilitating recovery of NBFCs’ dues from their borrowers. Parliamentary Standing Committee on finance has also already recommended these issues.