The Finance Industry Development Council (FIDC) has written to the Reserve Bank seeking restructuring of stressed retail and individual borrowers of non-banking finance companies, irrespective of whether these loans have been restructured earlier.

The industry body also asked for loan recasting for smaller NBFCs with assets of less than Rs 500 crore in a letter to RBI Governor Shaktikanta Das."Considering the severe second wave of Covid-19, the retail borrowers, including the MSMEs, as also the retail and wholesale trader industry shall be in urgent need of support from the lenders, to revive their economic activities," FIDC said, requesting extension of the restructuring scheme till March 31, 2022.

It stated that borrower accounts, regardless of whether they have been 'restructured' previously and are ‘standard' accounts as of March 31, 2021, will be required to be 'restructured' without any downgrade in asset classification . This, however, will be contingent on the lending NBFCs conducting a new credit assessment of the borrowing company, according to the statement. For the first quarter of FY22, the industry body has urged the RBI to allow a stalemate on buckets for restructured accounts.

The letter further said the only mode of borrowings for the smaller NBFCs (having asset size of less than Rs 500 crore) is to raise term loans from banks, financial institutions like Sidbi, Nabsamruddhi and Nabkisan and large NBFCs. These smaller players do not have access to the capital markets and they do not issue bonds. "We, therefore, submit that these small NBFCs may be given the benefit of getting their loans restructured (one-time) from banks and financial institutions (FIs)," the FIDC said. It said the restructuring will ensure that these small NBFCs remain eligible for further bank finance, there is no mismatch in their asset-liability position and will help them to support their wholesale and retail borrowers with fresh credit.

The industry group also urged the RBI to raise the overall support package for AIFIs – Nabard, Sidbi, NHB, and Exim Bank – from Rs 50,000 crore to at least Rs 75,000 crore. "While the existing allocation for other sectors may continue at their prescribed limits, the additional R. 25,000 crore may be made available exclusively to medium and small NBFCs, through Sidbi for a period of three years,” the letter said. Earlier this month, RBI had extended support of Rs 50,000 crore to the AIFIs for new lending in 2021-22.