NBFCs need not go too far in their enthusiasm to lend: FM Nirmala Sitharaman
Nirmala Sitharaman on Thursday said non-banking financial companies (NBFCs) and small finance banks need to heed the central bank and exercise due caution while lending, without “going too far too soon”.
Speaking at the Digital Acceleration & Transformation Expo in the capital, organised by Trescon, the minister said: «Enthusiasm is good but sometimes it becomes a bit too far for people to digest. So as a measure of caution the RBI (Reserve Bank of India) has also alerted small finance banks, NBFCs to be careful that they don't go too far too soon and face any downside risks later.»
Earlier this month, the RBI tightened the norms for unsecured consumer loans, as it directed banks and shadow banks to assign a higher risk weight to such credit.
RBI governor Shaktikanta Das on Wednesday said it was a «preemptive» move to ensure financial stability, as he cautioned against undue “exuberance” in lending.
Advice for banks
The minister also exhorted state-run banks to further improve efficiency in drawing depositors while remaining cognisant of their role in satiating the vast credit appetite of a fast-growing economy.
“Get deposits, give them (depositors) good interest rates, and then make good money out of it as well. But at the same time, be possibly conscious (of the fact that) India's growth depends on banks lending comfortably to people who want to set up units and grow them,” Sitharaman asked the public-sector banks.
According to the RBI data, non-food bank credit growth touched 15.3% in September, which is lower than the 16.9% a year before but well above the long-period trend.
Regulations vs innovation
The government has asked capital markets regulator Sebi to seek inputs from shareholders while drafting norms
