The Reserve Bank of India (RBI), strict compliance mandate for non-banking finance companies (NBFCs), has led to increasing permit cancellation.
According to the latest Right to Information (RTI) data, the central bank has cancelled registrations of 1851 NBFCs till March 2019, which is over eight times in number in comparison to the last year.
The number of lenders also went down to about 9,700, which is lowest in a decade-time, said a Bloomberg report.
The report further added that NBFCs are also witnessing financial crunch.
They could not raise even Rs 2 crore to meet regulatory requirements, said Mahesh Thakkar, director general at Finance Industry Development Council,
which has been seeking a liquidity window for non-banking finance firms.
Early this month, the central bank took some measures to help stressed NBFCs raise funds from banks.
Among the measures, it first increased the ceiling for a bank’s exposure to a single NBFC to 20% of its Tier I capital from 15% earlier. And it has allowed bank lending to NBFCs excluding microfinance institutions for on-lending to specific sectors.
Though, the RBI has not agreed to provide a separate liquidity window for the struggling shadow banks. The strict regulations requiring shadow lenders to appoint a chief risk officer has also not helped the cause.