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Non banking financial companies (NBFCs), housing finance companies (HFCs) and micro finance institutions (MFIs) which have been starved of finances ever since IL went belly up after large scale fraud and mismanagement by top management came to light in September 2018 have finally heaved a sigh of relief after the Reserve Bank on Friday opened two durable liquidity windows worth Rs 1 lakh crore for them.While the Rs 1 lakh crore LTRO announced on February 6 was not targeted at any particular segment, the similar amount of TLTRO announced on March 27 was targeted at the debt market with a similar mandate of investing 50 per cent of the funds in corporate bonds.But where the objective failed to meet the regulatory purpose was that the risk averse banks chose to pick only AAA rated debt and unnecessarily benefitting deep pocket corporates.The NBFC/HFC/MFI industry has wholeheartedly welcomed the move saying the TLTRO 2.0 will ensure broader liquidity transmission into the NBFC sector, which ultimately will benefit SMEs/MSMEs the key segment of the economy that is the most fund starved.Siddhartha Mohanty of LIC Housing Finance said the 25 bps reverse rate cut to 3.75 per cent will minimise the epidemiological damages due to coronavirus. Along with the 25 bps cut in the reverse repo rate, the NPA reclassification to exclude the lockdown period are a welcome measures, he added.”These steps are a much needed breathing space for the small borrowers and small shadow banks and help them tide over the unexpected financial and psychological jolt from the pandemic,” Mohanty told PTI.Harsh Shrivastava of MFIN also welcomed the move, saying the RBI has finally acknowledged “our concerns as a substantial portion of the Rs 50,000 crore liquidity infusion will help small medium players, which in turn will support the bottom of the pyramid customers”.Shachindra Nath of the small sized lender Ugro Capital said the fresh liquidity measures will ultimately help SME borrowers.”Ultimate beneficiary of these decisions are SMEs which fulfil their working capital requirement from the mid level Cheap Jerseys from china and small level NBFCs, especially if the focus of such measure is to ensure liquidity support to NBFCs looking to raise debt capital for lending as opposed to those that need capital to meet liquidity shortfalls,” Nath said.Rakesh Singh of Aditya Birla Finance said the TLTRO 2.0 will help small and mid sized NBFCs remain adequately liquid and stable and continue to function normally and thus help small borrowers. Similarly, the refinance facilities of Rs 50,000 to NHB, Sidbi and Nabard will give the necessary impetus to HFCs.Welcoming the RBI announcements, Vishal Kampani of JM Financial Group said these measures signal a strong intent of the RBI to turn the wheel of the economy.


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