An Imprudent 'Growth At Any Cost' Approach Counter Productive, Warns RBI

In a strong message in his monetary policy statement, the RBI Governor has warned Non-Banking Financial Companies (NBFC) cannot pursue 'growth at any cost'. "It is observed that some NBFCs are aggressively pursuing growth without building up sustainable business practices and risk management frameworks, commensurate with the scale and complexity of their portfolio", said Shaktikanta Das in his statement. He added that NBFCs needed to review their prevailing compensation practices, variable pay and incentive structures which appear to be purely target driven. "Such practices may result in adverse work culture and poor customer service", the Governor said. He warned that the RBI is closely monitoring these areas and will not hesitate to take appropriate action, if necessary.