Do you think that RBI needs to set up a special liquidity window for NBFCs as the sector is in dire need of a shakeup? Comment.
Published: June 28, 2019
The latest stability report by RBI has stated that the financial system of the country is largely stable as the main issue of bad loans has been arrested. The gross NPAs of the banks have fallen to 9.3 per cent in March 2019 from a figure of 11.5 per cent. It is expected by the RBI ha I will further fall down to 9 per cent in March 2020. The number of banks which have NPAs greater than 20 per cent have also grown. However, the problems of the NBFCs continue to plague the system. The NPAs of these have grown to 6.6 per cent in 2019. The situation is largely worsening and definitely, RBI needs to check this trend in advance before it turns out to be a systemic risk. Many of the biggest players in this segment are also trying really hard to keep up with the loan obligations of RBI. The financial system is largely interlinked and one weak connection can pull everything apart. RBI needs to open a special liquidity window for the NBFCs to keep them afloat. In addition, tough regulations along with a turnaround plan are the need of the hour.
Model Questions Category: 058 - Indian Economy Issues Relating to Planning