SIDBI has constituted an ‘Advisory Committee on NBFCs’ (ACON) comprising senior industry leaders, representative from Finance Industry Development Council (FIDC) and domain experts with the objective of providing guidance to the Bank in strengthening its initiatives to support the growth of NBFC sector with focus on smaller NBFCs. The first meeting of the Advisory Committee was held on July 20, 2023, at SIDBI, Mumbai Office.
Sivasubramanian Ramann, CMD, SIDBI during his address said that the smaller NBFCs, despite their sound business models and potential to play a much bigger role in financial inclusion, struggle to grow in scale due to inadequate resource support from conventional banking system – for a variety of reasons including heterogeneity of the space, absence of reliable data on their operational aspects, concerns about corporate governance, lower external credit ratings etc.
The Bank, in line with recommendations of UK Sinha Committee and 46th Standing Committee on Finance, has taken various measures to deepen credit markets for MSMEs especially in the underserved districts and regions by handholding private lenders like NBFCs. SIDBI has been engaging with smaller and lower rated NBFCs for quite some time now. It had launched the Scheme of Assistance for New-age FinTechs and thereafter during Covid 19, by providing liquidity assistance to such NBFCs under RBI SLS I and II, and subsequently developed innovative financial products under RBI SLS – III.
The Bank, in FY 2023, launched a regular Scheme of Assistance to extend financial assistance to A and BBB rated NBFCs. Further deepening its outreach, it has recently launched a Scheme of Developmental Assistance for extending financial assistance to below investment grade/ unrated NBFCs. + SIDBI is also working with various agencies for “capacity building” of smaller/ lower rated NBFCs and accordingly, it has constituted an Advisory Committee on NBFCs for providing inputs and guidance to SIDBI to facilitate taking a holistic approach in its developmental role to support the growth of NBFC sector with focus on smaller NBFCs.
SIDBI has also initiated the process of setting up an NBFC Growth Accelerator Programme in tie-up with GAME (Global Alliance for Mass Entrepreneurship) for the capacity building of the smaller and lower rated NBFCs for handholding of smaller NBFCs. He said that multiple level interventions by SIDBI in this regard are expected to culminate in enhancing the level of corporate governance in the target smaller NBFC segment, accelerate the access of such NBFCs to institutional credit at competitive rates and mainstreaming of a larger number of NBFCs resulting in channelising higher credit in MSME space.