The Assocham welcomes RBI's move to incentivize banks to enhance their lending to NBFCs as a step in the right direction which would enable NBFCs to tackle the liquidity crunch. This shall also send a message that the recent developments do not indicate any systemic problem but it is merely a case of sentiments having gone wrong after one of the big NBFCs defaulted.
 
The whole issue of Asset liability mismatch is more relevant in case of long term lending companies like the Housing Finance companies and Infra Financing NBFCs.
 
A typical NBFC model is a retail lending model with short tenures of 2 to 5 years and small ticket sizes where asset liability mismatch is not a concern. NBFCs have shown impressive growth for the last few years maintaining a high capital adequacy ratio which is higher than the minimum prescribed levels. This growth has also been healthy as reflected in better asset quality.
 
However, provision of a dedicated refinance window, especially, for the large number of small and medium sized NBFCs is very important to ensure future growth.