RBI cancels registration of 31 NBFCs

The Reserve Bank Friday cancelled the certificate of registrations of as many as 31 non-banking finance companies (NBFCs) for unspecified reasons. It also cancelled the certificate of registrations of 17 NBFCs following a request by them for the same. The action comes amid difficulties faced by the NBFCs sector. A majority 27 of the 31 companies which lost their licences are from Bengal,the central bank said in a statement. Bengal is followed by Uttar Pradesh, which has seen four NBFC licence cancellations, the RBI said, making it clear that these companies should not carry out business activities from here on. A majority of voluntary application for licence cancellation are also from Bengal, it said. The list includes Ramky Finance & Investment, which is based in Hyderabad. It also has city-based Propycon Trading & Investments, according to the RBI announcement. It can be noted that there are more than 12,000 registered NBFCs in the country under the regulation of the RBI, with a handful of them being deposit-taking ones which are regulated tightly. The NBFC sector is facing liquidity troubles following non-payment of dues by the troubled infra lender IL&FS since late August. The RBI has blamed many NBFCs for borrowing short for long-term assets, which results in potential asset-liability mismatches especially in times of increasing rates where they face trouble refinancing their borrowings.