Liquidity coverage ratio may not adversely impact growth of NBFCs

Initially, NBFCs have to maintain a minimum of 50 per cent of high quality liquid assets as part of the LCR, which will progressively touch 100 per cent by December 2024

The Reserve Bank of India’s (RBI’s) move to ask non-banking financial companies (NBFCs) to maintain liquidity coverage ratio (LCR) may not have any adverse impact on their growth parameters, as most of them have already been carrying extra liquidity on balance sheets.
 
“Almost all the NBFCs have been keeping additional cash on their balance sheet because of the uncertainty. So these guidelines are not going to change much for any NBFC. We are already incurring the cost of keeping a liquidity buffer so there will be only marginal impact on the margins. If at all, some NBFCs who are