FINANCEOUTLOOKINDIANOVEMBER, 20248SBI URGES RBI TO LIMIT THE NUMBER OF NBFC LENDERSBy Finance Outlook India TeamState Bank of India (SBI) has proposed capping the lending base of non-banking financial firms (NBFCs) to the Reserve Bank of India (RBI). Many NBFCs currently borrow money simultaneously from more than 50­60 lenders.The biggest bank in the nation feels that having a lot of lenders greatly dilutes the capacity to keep an eye on the loan books of NBFCs. Today, almost all NBFCs have a significant number of banks serving as their lenders. With this, the capacity to do due diligence is often hampered by a liability mix of up to 50-60 percent, according to a top SBI officer. The senior official clarified that although a single NBFC has loans from several banks, these institutions hardly ever interact or have meetings to discuss the borrower's performance.Their concerns are also based on the fact that, despite a significant decline, NBFCs' non-performing assets (NPA) remain elevated. According to the RBI, the gross non-performing assets (NPA) ratio of non-bank financial companies (NBFCs) decreased from a peak of 7.2 percent in December 2021 to 4.6 percent in September 2023.Furthermore, there are unlisted NBFCs whose data is also sometimes unavailable. According to a second source, "it will be difficult for anyone to know if there is any stress building up." He continued by saying that instances such as Infrastructure Leasing & Financial Services (IL&FS) and the former Dewan Housing Finance Corp (DHFL) have amply demonstrated the possibility of a domino effect in the event that they fail. REPORTBy Finance Outlook India Team
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