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Maintain business resilience, manage risks wisely: RBI Guv tells NBFCs

Das advised the NBFCs and MFIs to pay focussed attention to strict adherence to fair practices code, improve customer grievance redress mechanism and strengthen their IT systems

twitter-logoBusinessToday.In | May 3, 2021 | Updated 18:13 IST
Maintain business resilience, manage risks wisely: RBI Guv tells NBFCs

Reserve Bank of India Governor Shaktikanta Das urged non-banking financial companies (NBFCs) and microfinance institutions (MFIs) to stay true to supervisory expectations regarding maintaining their business resilience and managing risks prudently. Talking to managing directors and chief executive officers of select NFCs and MFIs, he acknowledged their role in providing credit to grassroot level.

Das advised the NBFCs and MFIs "to pay focussed attention to strict adherence to fair practices code, improve customer grievance redress mechanism and strengthen their IT systems in the interest of the institutions and their customers", RBI said in a statement on Monday.

Among other matters discussed during the meeting, emphasis was on assessment on current economic situation, which has taken a hit due to the second wave of COVID-19 cases in the country, as well as credit flows to borrowers of MFIs, outlook on potential stress on balance sheets of NBFC and MFIs, and liquidity scenario in the sector.

ALSO READ: NBFCs move RBI; seek loan recast, liquidity cushion as COVID-19 wreaks havoc

Last month, NBFCs had approached the central bank with demands of loan restructuring for a second time and fresh liquidity support for on-lending to MSMEs. Finance Industry Development Council (FIDC), a representative body cum self-regulatory organisation for NBFCs, had written to the central bank seeking fresh relief measures.

The request came in the backdrop of sudden burst of COVID-19 cases across the country and subsequent lockdowns announced by several state governments. The main demands of the NBFCs comprised permitting restructuring of loans for retail borrowers of shadow lenders, regardless of whether such accounts have been restructured on previous occasions or not. They also sought an increase in RBI's outlay for All India Financial Institutions (AIFIs) from Rs 50,000 crore to Rs 75,000 crore.

Industry players expect recent surge in COVID-19 infections to have a limited impact on the shadow banking sector with help from pent-up demand. They also are projecting a swift return to normalcy for the sector. Several states have categorised MFIs as essential services and allowed them to operate during lockdowns.

ALSO READ: COVID-19: Second wave will have minor impact on NBFCs; pent-up demand to help attain normalcy

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