The RBI has told banks that they should, however, ensure that such rediscounting is subject to normal lending safeguards. In a circular issued to all scheduled commercial banks on Wednesday, the RBI has stated that NBFCs play an important role in meeting the financing needs of the transport sector, particularly the commercial vehicles segment including trucks, cars, three-wheelers and other light commercial vehicles. "The ability of non-banking financial companies to meet these requirements, however, was constrained because of non-availability of rediscounting facilities from banks," RBI said in a release onWednesday. It may be recalled that RBI, had, a few months earlier, issued a circular to commercial banks that any funds lent by them to NBFCs for the purpose of on-lending to the transport sector, would qualify for priority sector lending. This was announced by RBI following hectic lobbying by NBFC associations with the BJP government.

With the public shying away from the deposit schemes of finance companies, the industry has been hard pressed for funds to meet their funding requirements. The sops being offered by the central bank to commercial banks is expected to lead to an increased flow of funds to the NBFC sector.