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On November 29, the Reserve Bank of India (RBI) relaxed the rules applicable to non-bank financial corporations (NBFCs) for the sale or securitization of their loan portfolios, in order to reduce the persistent stress of sector.
NBFCs can now securitize loans of more than five years after keeping them for six months, the Reserve Bank of India said. A banker had previously held these badets for at least a year, said a banker.
However, a reduction in the minimum holding period will be allowed when the NBFC retains 20% of the book value of these loans, said the RBI. .
NBFCs, more or less known as ghost banks, face stress on their balance sheets after the debt crisis that struck a major infrastructure finance company in September, causing panic among investors and a shortage of liquidity in the sector. Due to the volatility of financial markets, the RBI and the government have taken steps to counter the crisis and meet the financing needs of the sector, including providing additional liquidity to banks and strengthening credit for refinancing needs.
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