NEW DELHI: The Reserve Bank; which has been repeatedly flagging bad practices at NBFCs, MFIs and gold loan companies in the past; on Wednesday asked them to follow a ‘compliance first culture’ and has advised them to “self correct” and warned that else the heavy hand of the regulator will be raised.
At the press conference after policy meet, Governor Shaktikanta Das said a few NBFCs are aggressively chasing growth without building sustainable business practices and risk management frameworks, commensurate with their scale and complexities of their portfolios. Stocks of listed NBFC areremained undisturbed by this warning. The governor noted that with some NBFCs, it seems apparent that business targets are driving retail credit growth, rather than the actual demand. He made a strong case for dissuading such “push effects”.
“There has been some recent commentary on the likelihood of stress build-up in some unsecured loan segments like loans for consumption purposes, micro finance and credit cards. The RBI is monitoring the incoming information and will take measures as may be considered necessary. Banks and NBFCs, on their part, need to assess their individual exposure in these areas, both in terms of size and quality,” Das said in his televised address.