New RBI Debt Restructuring Rules May Hit NBFCs’ Profits

New Reserve Bank of India norms on debt restructuring are likely to hit the profitability of already distressed non-banking financial companies (NBFCs), Livemint reported. The guidelines mandate lenders to keep additional provisioning of 20% if a resolution plan is not implemented within 210 days from the date of default and 35% if not implemented within 365 days of default. This move to include NBFCs along with banks in the circular comes at a time when these firms are reworking their growth strategy in the wake of a liquidity crisis. The new RBI circular does not give any additional advantage or benefit to NBFCs, said Raman Aggarwal, chairman, Finance Industry Development Council (FIDC), an industry body for NBFCs. Read more

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