New Delhi, Mar 9: Notwithstanding the Reserve Bank's directive restoring the `at par' facility in September last year, banks are still reluctant to offer the facility to investors. According to the Association of Leasing and Financial Services Companies, even top-rated non-banking finance companies are being denied this facility. Says a top official of the association,`` Banks have been expressing their inability to continue the `at par' facility to their clients since April 1997.''In a letter to the Reserve Bank, the association has urged the central bank to advice all commercial banks to take a `very helpful attitude' in this matter. With banks not extending the `at par' facility, small investors are being put through a lot of discomfort. Not only do they face considerable delay in encashing their interest warrants, they also have to cough up the collection charges. To that effect, their return gets reduced.
Banks offer `at par' facility against the interest warrants, deposit repayments and dividendssent by corporates to investors. However, as the banks are not willing to offer the `at par' facility to their clients, investors have to send the warrants (for interest, dividends and deposits) for collection through their banks. This not only delays the receipts of proceeds from these instruments, it also results in investors paying the collection charges to banks. Investors are also at the receiving end when the instrument is required to be sent for collection by the investor bank through another bank as they have to pay the service charges of both the banks. This reduces the return to the investors and, hence, deposits of NBFCs are becoming less attractive.
``At par is a pre-funded facility and the banks run no risks whatsoever. On the other hand, the banks enjoy interest-free funds maintained in the current accounts by NBFCs,'' adds the Association of Leasing and Financial Services Companies.
