RBI puts on hold new NCD norms for NBFCs
Mumbai: In a relief to non-banking lenders, the Reserve Bank Wednesday said the proposal to have a minimum gap of six months for private placement of non-convertible debentures has been kept in abeyance for now.
"To facilitate the process of moving into a more robust asset liability mismatch in a non-disruptive manner, it has been decided that the instruction with regard to minimum gap between two successive issuances of privately-placed NCDs may not be operationalised immediately," RBI said.
The apex bank had last week issued a circular stating private placement of debt should not have more than 49 investors and minimum subscription from single investor should be Rs 25 lakh. It had also stipulated the time frame between two NCD issuances.
In the clarification today, the central bank said it has received a number of queries, especially regarding this clause with the time frame being a common refrain.
It said the freedom currently available to NBFCs to raise funds through NCDs without any restriction has resulted in inadequate resource planning and higher transaction cost, but said it is keeping the proposal on hold.
"A decision on the appropriate minimum time gap would be taken by the bank in due course," the circular said.
Rating agency India Ratings said this move will benefit large NBFCs as having the six month interval would have constrained NBFCs' access to the bond market, increased borrowing costs and potentially created assets liability tenure mismatches.
However, the Reserve Bank has today asked all NBFCs to prepare a policy for resource planning which should cover the planning horizon and the periodicity of private placement and get it approved from their boards by September 30.