Non-banking finance companies (NBFCs) are still calculating their statutory liquidity ratio (SLR) on a daily basis depending on the increase in their deposits.
This is despite the fact that as per the ordinance promulgated on January 9 NBFCs were no longer required to calculate their SLR on a daily basis.
The reason is that the Reserve Bank of India (RBI) has not issued fresh guidelines after the ordinance was promulgated.
The ordinance amending the Reserve Bank of India Act, 1934, had said that NBFCs have to calculate their SLR requirements on the deposits outstanding at the close of business on the last working day of the second preceding quarter.
This implies that on March 31, the NBFCs would have maintained their SLR on the basis of the deposits outstanding as on September 30, 1996.
This was a major relaxation from the NBFCs view point. They had been lobbying with the RBI for a long time that calculating the SLR obligations on a daily basis was creating problem.
Many a time they had to provide in excess of their requirements with a view to avoid penal action. This, they point out, led to inefficient utilisation of funds.
According to an official with a leading non-banking finance company, even though the ordinance has been passed, the Reserve Bank of India was waiting for the bill amending the RBI Act 1934 to be passed by Parliament.
This is the feedback they have received from the central bank.
The RBI had also set up the Khanna Committee to examine the functioning of non-banking finance companies.
The committee had recommended far reaching changes with respect to the supervision of NBFCs.
Another recommendation of the committee was the extension of the deposit insurance facility to the finance companies.
This was expected to improve the credibility of NBFCs in the eyes of the retail depositor and increase the ability to raise incremental deposits.
