NBFC body seeks govt permission to function partially during lockdown

The Finance Industry Development Council or FIDC, a representative body of non-banking finance companies, has written to the government seeking permission to function partially on the lines of banks during the lockdown.

"In view of the special circumstances, it is necessary that essential staff may be required to be physically present in the branch offices and they cannot work from home, for the collections, depositing cash in banks," said Mahesh Thakkar, director general of FIDC in a letter to the home secretary.

The government has exempted banks, insurance companies, stock markets and mutual funds from closing their offices during the lockdown. According to the body, NBFCs are the only part of the financial sector that have been left out.

The letter further requested permission for its members to be operational across the country as the fund requirements of their customers are growing at a rapid pace during the lockdown and cannot be fulfilled by commercial banks functioning with limited resources.

"If at least 30 per cent of our staff are permitted to be operative on a rotation basis, we can cater to the rising financial requirements of a larger segment of lower and middle-income customers during this challenging time," the letter said.

The letter has also been sent to Ministry of Home Affairs, Ministry of Finance and RBI.

FIDC has been also requesting for a three-month moratorium on loans given to NBFCs by lenders, including banks.

Earlier in March, it had asked the government to defer payment of equated monthly instalments (EMI) for businesses and individuals and extension of the period for recognition of NPAs from current 3 months to 6 months.

Last month, the RBI had announced a three-month moratorium on the payment of all term loans outstanding as on March 1. However, there is no clarity whether the central bank’s three-month moratorium is applicable on NBFCs loans.

As per rating firm Crisil, poor collection, which is most likely given ongoing lockdown, might hamper NBFCs ratings.

Update: The post has been updated after publication