RBI financial sector aid: RBI Guv Shaktikanta Das discusses credit flow to MFs, NBFCs, MFIs with bank CEOs, MDs

Reserve Bank of India (RBI) Governor Shaktikanta Das on Saturday held meetings with heads of domestic banks on the economic situation and credit flow to different sectors of the economy, among other issues, the central bank said in a release .

“The governor held meetings with MDs/CEOs of major public and private sector banks today in two separate sessions through video conference. The meetings were attended by Deputy Governors and other senior officers of RBI,” it said.

Das discussed credit flows to different sectors of the economy, including availability of liquidity to NBFCs, microfinance institutions (MFIs), housing finance companies (HFCs) and mutual funds.

NBFCs and MFIs have been demanding a moratorium on their bank obligations as they have been forced to give similar leeways to their lenders. They have been dealing with lack of liquidity, as banks and mutual funds have become wary of lending to them for fear of defaults.

Independent estimates peg the funding gap for NBFCs at Rs 60,000 crore despite RBI’s efforts to make funds available at cheaper rates. Das also reviewed the current economic situation, post-lockdown credit flow, including provisions for working capital, with special focus on credit flows to MSMEs and implementation of the three-month moratorium on repayment of loan installment announced by RBI.

Medium and small enterprises (MSMEs) have been the worst hit as the extended lockdown has left them starved of cash. Industries have been waiting for a stimulus package from the government, which is yet to see the day of the light.

The RBI Governor also deliberated on monitoring of overseas branches of banks in view of the slowdown in economies across the globe and stability of the financial sector during the meetings.