Bank Finance to NBFCs
Presently, banks are precluded from granting finance against existing assets whether by way of term loans for purchase of such assets or by way of finance to leasing companies for purchase and re-lease of such assets.
2. In the light of the experience gained by NBFCs in financing second hand assets, banks may, with effect from November 2004, extend finance to NBFCs against second hand assets financed by them. Banks may also extend financial assistance to the customers directly for purchase of second hand assets.
3. Banks may formulate suitable loan policies with the approval of their Board of Directors to finance second hand assets, both directly and through NBFCs.