RBI's Liquidity mandate for NBFC's

There is no denying the role of Non-Banking Financial Company (NBFCs) sector in the growth that India has experienced over the last couple of years. India's NBFC sector continues to remain at the forefront in driving new credit disbursals for the country's underserved retail and MSME market, thereby increasing the contribution of these segments to India's overall GDP. Over the last five years, the NBFC lending book has grown at nearly 18% driven by a deep understanding of target customer segments, use of technology advances, lean cost structures and differentiated business models to reach credit-starved segments.

The sector has witnessed an acute liquidity situation which, to some extent, has been alleviated through measures taken by RBI and the government to boost lending to NBFCs. It has concerned regulators about the overall governance in the sector.

The Reserve Bank of India (RBI) published guidelines on 'Liquidity Risk Management Framework for Non-Banking Financial Companies (NBFCs) and Core Investment Companies (CICs)', which are to be adopted by all deposit-taking NBFCs, non-deposit-taking NBFCs with an asset size of INR 100 crore and above, and all CICs registered with the Reserve Bank.

Implementation of the guidelines and development of a sound liquidity risk management framework in NBFCs is a cumbersome activity and will require the companies to make a significant effort.

The Product

Intellect's Capital Cube connects the levers of Issuance & Borrowings mobilization, Investments- Treasury Operations, Asset Liability Management and Liquidity Monitoring Tools. Capital Cube also provides regulatory compliance to manage risks and drive business growth. Thus it provides:

  • Issuance& Borrowings Mobilization to allocate funds quickly, mobilize investments with complete STP without any manual intervention
  • Integrated front to back office real-time treasury management fuelling business growth
  • Asset Liability Management that provides holistic view of assets and liabilities, identifying liquidity gaps and impact of interest rates
  • Liquidity Monitoring Tools to visualize changes, monitor and manage liquidity risk and solvency across time horizons

Specifically, it also addresses the issues mentioned in the RBI circular dated November 4, 2019.

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