RBI governor Shaktikanta Das warns NBFCs against pursuing unsustainable practices to push growth
The Hindu
RBI governor warns NBFCs against unsustainable practices, emphasizes need for sustainable growth and risk management frameworks.
Reserve Bank of India (RBI) governor Shaktikanta Das on Wednesday (October 9, 2024) warned of action against those non-banking financial companies (NBFCs) who are pursuing unsustainable practices to push growth.
In a strongly-worded statement, while announcing the bi-monthly policy review, Mr. Das asked such NBFCs to be sincere, fair and follow sustainable practices.
"It is important that NBFCs, including MFIs (microfinance institutions) and HFCs (housing finance companies), follow sustainable business goals; a 'compliance first' culture; a strong risk management framework; a strict adherence to fair practices code; and a sincere approach to customer grievances," Mr. Das said.
"The Reserve Bank is closely monitoring these areas and will not hesitate to take appropriate action, if necessary," he warned adding that the RBI wants NBFCs to undertake "self-correction".
“The NBFC segment has registered an “impressive growth” over the last few years,” Mr. Das said, acknowledging that such lenders have helped the policy objective of financial inclusion.
However, some NBFCs are pursuing growth aggressively without building up sustainable business practices and risk management frameworks, he rued.
"An imprudent 'growth at any cost' approach would be counter productive for their own health," the Governor said.
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