RBI Proposal May Put 70% NBFCs Out of Biz

Usha Thorat panel moots.25-cr minimum asset size

More than two-thirds of non-banking finance companies (NBFCs) face closure if the Usha Thorat panel recommendation on minimum asset size is implemented by the Reserve Bank of India, shutting a vital source of funding in many parts of the country. Nearly 9,000 companies lending to borrowers in small towns and villages that lack banking facilities could be in danger of losing their licences as their asset size is less than.25 crore. Around 70% of NBFCs could go out of business if the proposed requirement of.25 crore of financial assets is accepted, said Mahesh Thakkar, director-general, Financial Industry Development Council, the representative body of the industry. There are many companies with asset size of.5-10 crore that will be out of business, he said. The RBI-constituted panel, headed by its former deputy governor Usha Thorat, to tighten rules for NBFCs has proposed that these companies should have minimum assets of.25 crore. Thorat has also suggested that their minimum equity capital be raised to 10% of risk weighted assets from 7.5%.

Economic Times, New Delhi, 27-12-2012