New Delhi: RBI governor Shaktikanta Das in his monetary policy speech warned non-bank financial companies (NBFCs) against against aggressive expansion by offering high fixed deposit rates, among other such business tactics. The RBI governor said that these companies must work on improving their business practices. A failure to do so will invite strict action from the watchdog, he said.
The RBI governor expressed concerns over the buildup of unsecured debt on these entities’ loan books. He reiterated the importance of assessing individual risk-taking capacities before pushing loans to consumers.
No tolerance for poor quality unsecured loans, growth at any cost
Das also emphasised the importance of checking risks from dormant accounts and their potential to turn mules apart from broader cyber security risks. The Reserve Bank of India governor warned NBFCs against pursuing “growth at any cost”. In a bid to offer a higher return on equity to investors, non-bank lenders may have resorted to overcharging customers by levying an exorbitant processing fee or imposing massive penalties. RBI governor Das warned against these practices during his speech on the Monetary Policy Committee’s decision to hold interest rates.
RBI status quo on repo rates
RBI’s monetary policy committee comprising 3 new external members voted 5 to 1 against a rate cut for the 10th straight cycle. One member voted in favour of a rate cut. However, the MPC unanimously agreed to change the policy stance to “neutral” from the withdrawal of accommodation. The RBI governor said the Indian economy was slated for stable growth external pressures such as commodity price spikes and geopolitical risks notwithstanding.
He echoed US Federal Reserve Chairman Jerome Powell’s view that inflation was largely under control which will pave the way for rate cuts. However, the Reserve Bank of India governor fell short of sharing a timeline for when the central bank may start unwinding the repo rate.
RBI governor Shaktikanta Das in his MPC speech pulled up NBFCs for pursuing growth at any cost. The governor emphasised the importance of due diligence and customer safety in any lending approach. Biz News Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
