Non-banking financial companies (NBFCs) on Friday urged Finance Minister Nirmala Sitharaman to allow one-time restructuring of loan repayment terms to help them provide liquidity support to their borrowers who are facing cash flow issues.
The industry also sought extension of the tenure of the Rs 30,000-crore special liquidity scheme to three years as against three months currently.
These issues were discussed by the Finance Industry Development Council (FIDC), a representative body of assets and loan financing NBFCs, with the finance minister and secretaries of the Department of Financial Services (DFS) and the Department of Economic Affairs (DEA) through a video call on Friday.
The industry body said retail NBFCs principally finance truck and taxi drivers, marginal farmers and very small businesses who will need working capital support to get back to normalcy after the lockdown.
Non-banking financial companies (NBFCs) said they will need to provide these borrowers staggered EMI plans starting with lower instalments from July and gradually increasing and possibly reaching normal EMI amount by end of March 2021.
"We, therefore, seek permission to grant one-time restructuring of loan repayment terms without any additional provisioning," FIDC said in a statement after the meeting.
The RBI has allowed one-time restructuring for micro, small and medium enterprises (MSMEs) registered with GST up to December 31, 2020, without any downgrade but with five per cent additional provisioning.
"Our request is to expand the scope to all loans and that too without any additional provisioning," the industry body said.
It said that under the Rs 30,000-crore special liquidity scheme, the tenure of the NBFC debt to be acquired by the special purpose vehicle (SPV) is only three months whereas NBFCs lend for an average tenure of three years.
The step may not result in additional cash flows to NBFCs, it said.
"The special liquidity scheme should be amended to cover tenure up to three years so as to serve the purpose of improving the liquidity situation of NBFCs," FIDC said adding that the scheme should also cover term loans taken by NBFCs from banks and financial institutions (FIs).
It has also proposed to extend the partial credit guarantee scheme to cover new term loans sanctioned by banks to small- and mid-sized NBFCs (rated AA and below) up to 20 per cent of loan amount till the entire loan is repaid.
Banks should be asked to provide additional funds to their existing NBFC customers to the tune of 20 per cent of existing limits under targeted long-term repo operations (TLTRO 2.0) without any appraisal and collateral security, the industry body requested.
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