Microfinance institutions are seeking easier eligibility norms to qualify for the benefits of the special liquidity facility of the Reserve Bank of India.

RBI governor Shaktikanta Das had announced a provision of special refinance facilities for a total amount of Rs 50,000 crore to Nabard, Sidbi and NHB to enable them to meet sectoral credit needs.

However, stiff eligibility conditions mean that only a handful of NBFC MFIs would be able to benefit from the regulator’s move.

“According to normal Nabard norms, only NBFC MFIs with asset size of Rs 500 crore and above are eligible. So, only about 23 big NBFC MFIs will benefit. The problem is more acute for smaller MFIs, non-NBFC MFIs and self-help groups who are also into microlending,” said

P. Satish, executive director, Sa-Dhan. As on February 29, 2020, the RBI had a list of 97 NBFC MFIs.

NBFC credit line

Analysts feel a direct credit line from the RBI through subscription to corporate bonds could address some of the current liquidity concerns of NBFCs after the lukewarm response to the first targeted long-term repo operation for this sector.

“The RBI has to directly look at investing in the bonds of NBFCs and not only the AAA ones but across the board,” said Hemant Kanoria, chairman of Srei Infrastructure Finance.

He said in the current economic situation, cash flows of all companies are affected and no banks are looking to take risks on any sector, including NBFCs. The problem needs to be addressed through a one time restructuring window for all borrowers instead of categorising them as NPAs.