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NBFIs can now show unrealised interest as income

Sun Dec 19, 2021 09:08 PM Last update on: Sun Dec 19, 2021 09:13 PM
Photo: Collected

The non-bank financial institutions (NBFIs) can now show their unrealised interest of loans as income if borrowers can pay 25 per cent of their annual instalments by this year.

The NBFI has taken the opportunity after the central bank had allowed banks to enjoy the same facility last week.

The banking regulator today issued a notice in this regard saying that the loans will not be treated as default ones as well.

The NBFIs will have to realise the instalment amounts by this year in order to enjoy the facility.

Some central bank officials, however, opposed the measure saying that it would inflate the profit of the NBFI sector artificially as the income have not been earned in the form of cash.

The profit of banks and NBFIs will just increase on papers, they said, differing the decision taken by the central bank’s high-ups.

The BB, however, said NBFIs would have to keep an additional 2 per cent provision against the loans, which will enjoy the opportunity.

The non-banks will not be allowed to transfer the provisions to their income segment without prior approval from the central bank.

The loans, which had been earlier rescheduled or restructured by taking special permission from the central bank, will not enjoy the relaxed policy.

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