The Ministry of Home Affairs (MHA) on Friday issued an order permitting non-banking financial companies (NBFCs), including housing finance companies (HFCs), microfinance institutions (NBFC-MFIs) as well as cooperative credit societies from the financial sector – to be operational during the extended lockdown period, with minimal personnel.
The development comes after NBFCs and MFIs made repeated requests to the government seeking permission to function. In the initial 14-day phase of the nationwide lockdown, from the financial sector, only banks were allowed to operate.
The order is applicable for the said financial institutions across all states and union territories. The order was issued in accordance with the revised guidelines for the extended lockdown period, announced by Prime Minister Narendra Modi on April 14 to contain the spread of the novel coronavirus disease.
The order also says that all operations related to agriculture and horticulture, including procuring, harvesting and processing of Minor Forest Produce (MFP) and Non-Timber Forest Produce (NTFP) by scheduled tribes and other forest dwellers in forest areas is allowed.
The list of activities permitted includes plantation and harvesting, packaging, selling and marketing of plantations such as bamboo, coconut, cocoa, and spices.
Besides this, the fresh order grants permission to construction activities in rural areas related to water supply and sanitation, setting up of power transmission lines and placing telecom optical fibre and cable lines.
Rashmi Saluja, Executive Chairperson of Religare Enterprises Ltd, said the announcements by the RBI were a welcome move and will go a long way in mitigating some of the working capital and cash flow issues of the NBFC sector. "The exclusion of the moratorium period in evaluating NPA’s/asset classification will also help the NBFC immensely. Overall, the 25 BPS in the reverse repo rate and the other liquidity injection measures are a much needed positive move," said Saluja.