Home       Contact Us       Useful Links       Sitemap
Our main objective is to work towards bringing discipline among
our members by enforcing a model code of conduct, besides
presenting a unified face of this sector
 
  You are in : From the Press

From the Press

FIDC to take up deposits issue with Reserve Bank

S Bridget Leena / Chennai / Business Standard / October 29, 2004

The Finance Industry Development Council (FIDC) - the self regulatory organisation for registered non banking finance companies (NBFCs) - expects to take up the issue of phasing out of NBFCs from accepting public deposits, with Reserve Bank of India (RBI).

Mahesh Thakkar, director general, FIDC, told Business Standard, "Moving towards international best practices by phasing out public deposits is a welcome move, provided RBI allows banks to refinance NBFCs at lower lending interest rates and the companies are treated on par with banks in terms to taxation, access to debt recovery tribunal and Securitisation Act."

"We will have a detailed discussion with the central bank on this issue next month. The banks have expanded their lending portfolios to car financing in a big way, we have similar set of borrowers. Unless we are able to mobilise funds from banks at cheaper rate, it does not make much sense for customers to borrow from us." he added.

The number of deposit taking NBFCs has also reduced to 577 in 2004 from 996 in 1997. The deposits of NBFCs declined from Rs 6,500 crore in 2000-01 to Rs 3,400 crore in 2003-04.

When asked about this trend, Thakkar said that the option of accepting deposits from the public should not be completely shut. As rated NBFCs can borrow over four times of their net owned fund while unrated ones can borrow only up to 1.5 per cent or Rs 10 crore which lesser.

The options for raising funds available to NBFCs are capital markets, debentures, bank credit, public deposits and external commercial borrowing (ECBs).

Of this, the last avenue has already been shut, with ECBs being allowed only for infrastructure funding. Mobilising funds from capital market too would prove to be expensive, Thakkar said.

The average cost of funds of NBFCs is around eight per cent during the current financial year. He pointed out that RBI has reported that there have been no defaulting NBFCs since 1998.

The monetary and credit policy announced by RBI two days ago stated that the regulator will direct the NBFCs to phase out accepting public deposits and shall review regulations on banks lending to NBFCs. This step of the central bank is a prelude to making the Indian financial system move towards global standards.

T T Srinivasaraghavan, managing director, Sundaram Finance Ltd, which is also a member of FIDC, said NBFCs will want to follow international practices in all spheres, given a level playing field and not just follow a single framework alone.

There are about 300 companies which have become members of the FIDC out of 613 A category finance companies.

The deposits mobilised by these 613 finance companies is estimated at around Rs 4,500 crore. Sahara, which is residuary NBFC, is also member of FIDC and would alone have about Rs 5,000 crore deposits, sources said.


   
From the Press

External borrowing: RBI opens automatic route for asset finance firms
RBI asked to restore priority sector status for bank loans to NBFCs
NBFCs expect 25-bp cash reserve ratio cut by RBI
NBFCs Seek RBI Help to Tide Over Liquidity Squeeze
Pressclipping
Business World NBFCs
Pressclipping
Pressclipping
Pressclipping
NBFCs and Banks are Complementary entities in our economy
Need For Strengthening NBFCs
NBFC norms due to global action: RBI
RBI Allays Fears Over Survival of Small NBFCs
NBFC body asks RBI for same benefits as banks
RBI dispels NBFCs' fears of closure
Pressclipping
Rs 25-crore criterion only for deposit-taking NBFCs
Pressclipping
Discussion
Discussion
Press Release
Pressclipping
Pressclipping
Fraud in vehicle resale may rise on Delhi Govt notice
L&T Financial Serv Calls for changes in norms for NBFCs
Untapped Growth Prospects Lure PE Firms to NBFCs
Risk Spectrum of Financial assests held by banks and NBFCs
Should NBFCs Lose Priority Sector Tag? - ECONOMICS TIMES 11th May 2011
RBI's working group studying steps to reform in NBFC-CIC regulation
Gujarat HC judgement
Service Tax petition : Madras HC's judgement
SF MD's speaks on the Financial Services Industry
Handbook on Repossession of assets released
Rules set for NBFCs on repossession of assets
Handbook on repossession of assets
FIDC mulls fresh asset recovery norms
2009 World Leasing Convention in London
Reposession of vehicles gets easier for banks
Free to seize cars for EMI default: HC
NBFC's seek long term funds
FIDC seeks support for commercial vehicle funding
Article on NBFC's
Article on NBFC's
Govt mulls differential rate of interest for NBFCs
NBFCs may get 5K-cr credit line
FIDC to take up deposits issue with Reserve Bank
NBFCs finally set up SRO
NBFCs` organisation seeks sops in Union budget
SRO for NBFCs round the bend
© Finance Industry Development Council. All rights reserved. Best viewed with Internet Explorer 5+ @ 800*600 resolution