Industry dubs RBI move as `anti-reform’

"The minimum credit rating requirement for raising deposits will kill the industry. Too much importance is being given to rating. Many NBFCs will be forced to close down as this is their only source of funds as banks are no more lending to them and primary market is dead," Thakkar added.

The new restriction making NBFCs to raise only three times their net owned funds for Triple A rated companies and 0.5 per cent for single A rated companies will affect the existing asset liability structure of most of the NBFCs. "RBI should now be acting more like a developer of the industry.

There has been several areas such as setting up a recovery tribunal, a new money lending Act etc, in which RBI could have played a developmental role," he said.

While Adarsh Gupta, Jt President, Birla Global Finance Ltd said: "The Reserve Bank has taken a very drastic step in restricting the amount of deposits that an NBFC can raise to a maximum of three times their net owned funds for companies in leasing and hire purchase. This would kill the industry as most of the NBFCs already have raised that much.

"This would mean that NBFCs will not be able to undertake any fresh business. Also, the requirement that for a company to be considered as a leasing and hire purchase company and it should have 60 per cent of its income and asset coming from equipment leasing and hire purchase is harsh.

Many of the companies are making much larger profits out of advisory services, which is virtually no-risk income, though their main fund based business continues to be leasing and hire purchase."

"The prohibition on NBFC’s having net owned fund of less than Rs 25 lakhs would stop mushroom growth of small and weak NBFC’s just for the purpose of taking advantage of high leveraging opportunities," said P K Choudhury, Managing Director, ICRA Limited. However, the new non-performing assets (NPA) norms for non-banking finance companies (NBFCs) announced by the Reserve Bank of India has come as a shot in the arm for the industry.