moneycontrol.com
The non-banking finance companies have prepared a presentation containing seven-point changes in the recently released draft guidelines by Usha Thorat committee. Finance Industry Development Council (FIDC), the industry body for NBFCs already met Uma Subramaniam, chief general manager (department of non-banking supervision), RBI to convey their reservation against select norms.
"We have tried to justify our stance on proposed changes through the presentation," said Mahesh Thakkar, director general, FIDC told moneycontrol.com.
"The meeting with the CGM apparently did not yield any encouraging response. We are pleading for both big and small NBFCs. For example, big NBFCs will find it tough to meet the proposed tier I capital requirement in this uncertain market condition. A year back,They met RBI's new capital adequacy norm from 12% to 15%. Even though some branded NBFCs are enjoying excess capital but there are around 700 relatively large size companies, which will be majorly hit due to the proposed norm," he explained.
Thorat committee has set the ceiling for tier - I or equity capital at 10% from the existing 7.50%. Industry players argued that they could think of hiking tier I capital after two-three years by when market should turn conducive. At present, private equity players too are averse of funding NBFCs.
Secondly, it is suggested that NBFCs should start classifying loan account as non-performing assets if repayment is overdue for 120 days from April 1, 2014; and for 90 days a year thereafter. This was at par with the banking standard.
Also read: Revised NBFC guidelines to impact profitability by 25 bps
"This will lead to financial exclusion. We cater to the people in the unorganized sector. Those non-bankable customers come to us to get quick and easy credit. Overall recovery is also good for the industry. In case of 90 days norm, we need to pressurize customers right from 30 days onwards. This will alienate a big chunk of customers," said the CFO of a large NBFC on condition of anonymity.
If any NBFC takes repossession of collateral, say a commercial vehicle, after 90 days; the small time truck operator will have no other option but to exit his business. However, it hardly matters for a big fleet operator, if a lending bank takes repossession of just one vehicle out of many, cited FIDC corroborating the retention of 180 days regulation.
Besides, FIDC has also raised its voice against the rating of smaller NBFCs and new proposed benchmark of Rs 25 crore to get registration from the central bank. According to them, the cost of ratings will be too high for those tiny NBFCs in small towns and villages, wherein turnover would be in the range of 5-6 crore.
saikat.das@network18online.com
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