NBFCs have emerged as one of the largest consumers of bank credit. Bank lending to NBFCs is almost double their lending to industries in FY23. Besides providing direct loans to finance companies, banks have also been partnering with them for co-lending.
Key topics discussed included reliance on bank borrowings, risks tied to high credit growth in the unsecured retail segment, IT system upgrades and cybersecurity, provisioning coverage, stressed assets, lition. quidity and asset-liability management, and maintain transparent credit pricing and adherence to Fair Practices Code.
Apart from the RBI governor, the deputy governors and the managing director of the National Housing Bank attended the meeting. The Governor highlighted the pivotal role of NBFCs in extending credit to underserved regions and emphasized the sector’s significance in the economy.
The meeting emphasised the importance of maintaining robust liquidity and effective asset-liability management practices. Das stressed the necessity of ensuring reasonableness and transparency in the pricing of credit offered by these financial entities. Participants were advised to adhere to the fair practices code and were required to establish a robust grievance redressal mechanism. He asked NBFCs and HFCs to focus on delivering credit to unbanked and underserved areas as a significant economic contribution.