NS Confederation of Indian Industry (CII) and Associated Chambers of Commerce and Industry of India (Assocham) are writing to the regulator to review the criteria that asks NFBCs to classify loans on the basis of daily repayment.
in his letter to reserve Bank of India Industry bodies have argued that it would be difficult to enforce strict day-to-day payment based classification for the borrowers serviced by them as their cash flows and supplies are disorganized. These borrowers make one-time payments.
A person familiar with the development said, “Our main point is that we mostly serve small borrowers, truck drivers, owners of light commercial vehicles or even farmers. These people have stable income like the salaried people. Not there.” “As a result, payments often do not arrive on or before the due date, so we give them some leeway, such as making payments before the end of the month. The same strict classification of banks would derail this system and many borrowers would be forced into it. could put you in trouble.”
In a clarification earlier this month, the RBI said loan accounts should be classified as NPA Unless the entire outstanding amount of interest and principal is paid by the borrower. NBFCs have been specifically asked to mention the exact due date of loan accounts and break-up of principal as well as interest. These norms have now brought loan classification by NBFCs at par with banks and are another move by RBI to tighten the rules on NBFCs, though they serve a different set of customers. The changes will be effective from the next financial year.
Crisil said that the impact of new RBI rules on unsecured loans NPA It is expected to be in the range of 1% to 3% for MSME finance and 1% to 2% for vehicle finance, expected to be in the range of 1.5% to 3%.
Industry leaders are hoping that the central bank will at least give them some more time or introduce new norms gradually or in a phased manner.