Allow us to raise ECBs, asset financing NBFCs tell RBI

Asset financing non-banking finance companies (AFCs) have urged the RBI to permit them to raise external commercial borrowings.

Allowing these companies to raise ECBs would help them diversify their source of borrowings and raise funds at cheaper rates, they have submitted.

Also, such long-term borrowings would lend stability to the asset-liability profile of the AFCs, the Finance Industry Development Council (FIDC) has said.

This suggestion forms part of the representation made by the FIDC to the RBI on the draft guidelines of the Usha Thorat Committee report on issues and concerns of NBFC sector.

FIDC is a self-regulatory organisation representing the Asset Financing NBFCs.

This industry body has also said that Tier-I capital requirement for AFCs be maintained at the existing level of 7.5 per cent.

If it is enhanced to 10 per cent, then the risk weight assigned to productive and real assets such as commercial vehicles, construction equipment, tractors, multi-utility vehicles and cars be reduced to 50 per cent levels, FIDC has said.

The draft guidelines of the Usha Thorat committee stipulate that Tier-I capital for capital adequacy ratio purposes be enhanced to 10 per cent (12 per cent for captive NBFCs and those lending to sensitive sectors).

Existing NBFCs have to conform to this norm within three years from the date of notification, the committee has proposed.