‘Need as­set qual­ity re­view on NBFCs’

The New Indian Express - - BUSINESS -

FOR­MER chief eco­nomic ad­viser Arvind Subra­ma­nian called for an as­set qual­ity re­view of non-bank­ing fi­nance com­pa­nies, speak­ing in Mum­bai on Fri­day at the launch of his book Of Coun­sel: The Chal­lenges of the Modi-Jait­ley Econ­omy. He pro­posed that the RBI con­duct an AQR on the lines of what it did for banks in 2015.

“I am propos­ing an AQR for NBFCs. We don’t know what is there. We need to get to the bot­tom of this in or­der to be con­fi­dent, we fi­nally know how much bad as­sets are there and then think of what so­lu­tions need to be thought of,” he said.

Con­cerns about de­faults af­ter the col­lapse of In­fra­struc­ture Leas­ing & Fi­nan­cial Ser­vices and the en­su­ing liq­uid­ity crunch has put the spot­light on NBFCs in re­cent months. Though sys­tem­i­cally im­por­tant, NBFCs are well reg­u­lated and milder com­pared to banks. Like how AQR on banks helped un­cover a huge pile of bad loans, sim­i­lar re­view on NBFCs can help bring out any hid­den is­sues. “Here’s a `90,000 crore ele­phant that comes out of the blue … Just think about the qual­ity of over­sight,” he said on IL&FS.

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