RBI measures for NBFCs unlikely to boost credit flow to broader economy: Moody's

The Reserve Bank of India's (RBI) measures to help facilitate funds to the NBFC sector is unlikely to boost the credit flow to the broader economy as NBFCs would shore up their own liquidity rather than on-lending to customers, Moody's Investors Service said on Sunday.

Moody's Investors Service Vice-President (Financial Institutions Group) Alka Anbarasu said the measures will soften the near-term credit negative impact on non-banking financial companies' (NBFCs) funding and liquidity.

On Friday, the RBI said it will conduct second tranche of targeted long-term repo operation (TLTRO 2.0) for an aggregate amount of Rs 50,000 crore, to begin with. Under this, banks can access three-year funding from the RBI that should be invested in investment grade bonds, commercial paper and non-convertible debentures of non-banking financial companies, with at least 50 per cent of the total amount availed going to small and mid-sized NBFCs and microfinance institutions (MFIs).

"Although the RBI ...