In an effort to check use of formal sources of money for grain hoarding, the Reserve Bank of India has asked bigger non-deposit taking non-banking finance companies to report to it within 15 days their exposures to large borrowers for procurement of grain.
The directive comes in the backdrop of concerns that some of corporates/entities may be hoarding foodgrains, which could have had the benefit of resources from NBFCs.
The NBFCs with assets of Rs 100 crore and above should review the big-ticket accounts and confirm that funds have not been diverted to corner foodgrains for hoarding.
NBFCs must submit a comprehensive report by March 10, 2007, RBI said in a communication to NBFCs.
The central bank has already advised banks to carry out similar checks on any diversion of funds by corporate and entities to stash foodgrains.
The RBI is concerned with surging inflation, mostly contributed by rising prices of primary article including foodgrains.
It has taken steps like increase in the cash reserve ratio twice within three months to curb money supply. It maintains that present inflation is more an outcome of supply side constraints.
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