RBI toughens liquidity rules for non-banks in wake of 2018 stress
Default by IL&FS triggered liquidity problems across financial markets
The Reserve Bank of India has moved to toughen its requirements for liquidity risk management at non-bank financial companies (NBFCs), including the imposition of a Basel-style liquidity coverage ratio.
The move follows the 2018 default of IL&FS, a non-bank infrastructure finance firm, which spread fears of knock-on effects throughout India’s financial markets, triggering a liquidity crunch.
“An analysis of the recent developments in the NBFC sector pointed to the need for a stronger asset
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