Govt exempts NBFCs from debenture reserve requirements

India’s shadow lenders and listed companies who issue debentures will no longer have to maintain a certain level of redemption reserves against them, the government said in a statement on Monday.

The move will make it cheaper for these companies to raise funds and deepen the nation’s bond market, the government said.

The shadow lenders have been facing a liquidity crisis in the past year, which has forced them to pull back on lending, hurting the availability of consumer loans.

The move will create more of a level-playing field between shadow lenders, also known as non-banking finance companies (NBFCs), and commercial banks.