New Delhi, Jan 6 :
The recent Infrastructure Leasing and Financial Services (IL&FS) crisis points to several lacunae in the regulation of non-banking finance companies as well as lack of data and interaction, Economic Affairs Secretary S.C. Garg said on Saturday.
Speaking at a CII event, Mr. Garg said, “IL&FS crisis shows there are lots of gaps not only in terms of regulations, but also in data collection, information, interaction with the government or the regulators.”
“Today, we don’t even know who to talk to in NBFCs and there are no organisations that represent them,” he said.
The IL&FS crisis triggered after the infrastructure developer and financier defaulted on loans and faced ratings downgrade. This impacted other NBFCs, which saw their cost of funds going up significantly within weeks.
The Reserve Bank of India (RBI), in a recent report had said it intended to strengthen the asset-liability management framework for NBFCs similar to that of banks. “Data points are very poor today when it comes to NBFCs. When the IL&FS episode happened, we wanted to look at how much change is taking place in financing side, where [and] who they are lending to, and what kind of assets they have. We don’t have the data on NBFCs even on a monthly basis, forget daily, which we need,” Mr. Garg said.
Sound regulation
“Sound regulation is necessary for the development of NBFCs. Any regulation that throttles growth is not a good regulation,” he added.
The Centre is trying to work with the RBI to create a system for more information about the sector, he said. There are about 10,000 NBFCs registered with RBI.
