Closely monitoring financial markets, say RBI and SEBI

Following volatility in the equities market on Friday, the central bank and the capital markets regulator have said the developments are being closely monitored and they are ready to take action, if necessary.

“The Reserve Bank of India and the Securities and Exchange Board of India are closely monitoring recent developments in financial markets and are ready to take appropriate actions, if necessary,” a statement said.

Sources said the top officials of the central bank and market regulator discussed the Friday’s development following which the statement was issued.

The stock markets saw wild swings on Friday with some of the non-banking finance company stocks being hammered down. Mortgage lender Dewan Housing Finance Ltd (DHFL) lost 42% of its market capitalisation which also impacted other NBFC stocks. Investors are also worried about the recent developments in IL&FS that had defaulted on commercial paper resulting in rating downgrade.

State Bank of India — the country’s largest lender— also stepped in to allay fears of concerned investors. SBI Chairman Rajnish Kumar said SBI would continue to lend to the NBFCs. “Some comments are being attributed to the SBI about the bank being wary of lending to NBFCs.

Baseless rumours

“The rumours are baseless. SBI lends support to NBFCs in private and public sector within the regulatory policy framework and will continue to do so," said Mr. Kumar said. He aid he was not concerned with the liquidity position of NBFCs.

“There is no concern on liquidity of NBFCs in view of their liquid cash position and availability of committed lines,” he said.

“In fact the recent regulatory guidelines on the co lending model opens up further opportunities for collaboration between SBI and non deposit taking NBFCs to increase lending to priority sectors,” Mr. Kumar added.

Last week, the RBI has issued norms on co-origination of loans by banks and NBFCs to the priority sector with the objective of lowering interest burden of the borrowers.

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Printable version | Oct 1, 2020 8:08:44 AM |

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