Liquidity constraints plaguing Non-Banking Financial Companies (NBFCs) sector dominated a meeting on Wednesday between the heads of these institutions and the Reserve Bank of India (RBI).

RBI officials led by the new governor, Shaktikanta Das, sought the NBFCs' views on liquidity issue and various regulatory norms in place for the sector, in what was described as an "open discussion with no set agenda" by some of those who attended, according to sources familiar with the matter.

The head of a Mumbai-based NBFC told CNBC-TV18 on the condition of anonymity that NBFCs brought up liquidity constraints for the sector, while expressing concerns about the negative sentiment being created about NBFCs after the IL&FS crisis and sought more avenues for capital support.

RBI officials met representatives of 14 large NBFCs, following their meetings with heads of public and private banks and associations of small and medium enterprises (MSMEs), to asses the current liquidity condition.

The representatives have proposed that small and mid-sized NBFCs should get refinancing facility from Mudra Bank, added the sources.

Some of the representatives complained that banks were charging a high rate of interest from NBFCs and resorting to cherry-picking their portfolio at a time when the industry has few options for liquidity support, the source said.

In addition, they have also sought the creation of a formal platform, to function as an advisory representative body for NBFCs, to engage with the RBI regularly, said a person in the know.

Some chiefs present at the meeting added that they have requested RBI to consider allowing more NBFCs with assets over Rs 1,000 crores to accept deposits from the public.

Sundaram Finance, Shriram Transport, Bajaj Finserv, L&T Finance, Aditya Birla Financial Services, IIFL, PFC, Edelweiss Financial Services, Muthoot Finance and Tata Capital were among the NBFCs present in the meeting.

The liquidity problem in the NBFCs and housing finance companies (HFCs) came to the fore after series of loan defaults by IL&FS, one of the largest NBFCs in the country.

The government has superseded the board of IL&FS, and the debt-ridden company has already started the process to monetise its several assets.

On Monday, the RBI governor said the central bank will take steps if there is a liquidity shortage in the economy, though currently liquidity needs are largely met.

First Published:Jan 9, 2019 2:13 PM IST