Mumbai: The RBI has asked major non-banking finance companies to look beyond banks for loans and flagged rising unsecured retail credit. In a meeting with CEOs of large NBFCs and housing finance companies, RBI governor Shaktikanta Das commended the improved financial health of NBFCs and their operational resilience in recent years. However, he stressed the need to enhance governance standards, compliance mechanisms, risk management, and internal audits.
NBFCs have emerged as one of the largest consumers of bank credit. Bank lending to NBFCs is almost double their lending to industries in FY23. Besides providing direct loans to finance companies, banks have also been partnering with them for co-lending.
Key topics discussed included reliance on bank borrowings, risks tied to high credit growth in the unsecured retail segment, IT system upgrades and cybersecurity. Das stressed the necessity of ensuring reasonableness and transparency in the pricing of credit offered by these financial entities. Participants were advised to adhere to the fair practices code and were required to establish a robust grievance redressal mechanism. He asked NBFCs and HFCs to focus on delivering credit to unbanked and underserved areas as a significant economic contribution.
