Moreover, systemically important NBFCs should be allowed to act as aggregators by availing refinance from MUDRA for on lending to small and medium sized NBFCs.
The long term measures that the council has suggested include dedicated refinancing window for NBFCs on the lines of National Hosuing Bank (NHB), which provides refinance to housing finance companies.
They have also suggested the creation of an alternate investment fund (AIF) to channelize institutional funds to NBFCs.
“Non-convertible debentures (NCDs) could be subscribed to by the AIF for onward lending by NBFCs. These NCDs could be administered by investor trustees who could take care of the interests of the AIF and its constituents and would be subject to all extant guidelines in this regard”, said FIDC.
The FIDC has asked the RBI and the government to allow NBFCs an on-tap facility for issuance of NCDs to the retail market.
The FIDC said that the asset liability mismatch is predominantly an issue only for long term lenders such as HFCs and Infra Financing NBFCs and not for general, since 25-30 per cent assets of general NBFCs mature within one year.
They said, the disbursement of NBFCs in the fourth quarter of FY 19 dropped 31 per cent but there have been no cases of default after the Infrastructure Leasing and Financial Services (IL&FS) defaulted on its debt obligations in September 2018. “As such current crisis is more a growth related issue and not a solvency issue”, FIDC further said.
Moreover, FIDC said,” Banks have withdrawn unutilized credit lines to NBFCs and shown reluctance and hesitation to renew existing credit lines”. This has resulted in cost of funds for even the AAA rated NBFCs go up by 100 basis points.