Analysts said currently LIC Housing and MMFS fail to meet the proposed eligibility criteria for paying dividends.
“LIC Housing Finance, which has been struggling with lower capital adequacy for the last couple of years, fails to attain the first benchmark of minimum 15 per cent capital adequacy. However, as per an exception provided by RBI, the company could pay dividends if it raises capital during the current year. Similarly, MMFS fails to comply with net NPA norms (4.7 per cent as on Sep 20 against required 4 per cent), however, stronger recoveries during H2FY21 can allow the company to utilise this exception,” it said.
Analysts said most large NBFCs
were better placed to meet the proposed norms. NBFCs
have seen significant regulatory tightening since the IL&FS crisis in 2018.
has proposed to tighten regulations for NBFCs post the IL&FS crises. The regulator introduced LCR (liquidity coverage ratio) guidelines in the past year, capped HFC (housing finance company) leverage and has now prescribed dividend caps. RBI
will likely tighten regulations for large NBFCs further. A ‘scale-based regulatory approach linked to the systemic risk contribution of NBFCs’ will be proposed in the next one month,” said a note by Kotak Institutional Equities.
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