NBFCs with Substantial Systemic Risks Must Be Subjected to Higher Degree of Regulation: RBI DG
4 years, 1 month ago

NBFCs with Substantial Systemic Risks Must Be Subjected to Higher Degree of Regulation: RBI DG

News 18  

Asserting the need to recalibrate regulations for shadow banking sector, Reserve Bank Deputy Governor M Rajeshwar Rao on Friday said NBFCs with significant externalities and which contribute substantially to systemic risks must be identified and subjected to a higher degree of regulation. "One can also argue that the design of prudential regulatory framework for such NBFCs can be comparable with banks so that beyond a point of criticality to systemic risks, such NBFCs should have incentives either to convert into a commercial bank or scale down their network externalities within the financial system," he said. Observing that NBFCs currently enjoy great degree of regulatory arbitrage vis-a-vis banks, he said, these entities can contribute to build-up of systemic risks because of the regulatory arbitrage enjoyed by them and hence there is a need to recalibrate the regulations. Talking about microfinance sector, Rao said, the share of NBFCs-MFIs in the overall microfinance sector has come down to a little over 30 per cent as several large MFIs have converted into Small Finance Banks.

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RBI deputy governor urges banks to be prudent on lending to NBFCs
11 months, 3 weeks ago

RBI deputy governor urges banks to be prudent on lending to NBFCs

Live Mint  

Mumbai: Banks need to reconsider whether they want to be part of lending consortiums to non-bank financiers that have scores of other lenders – up to 40 at times – to improve their monitoring of borrowers' use of sanctioned loans, RBI deputy governor Swaminathan J said. The deputy RBI governor was responding to a question from SBI managing director Ashwini …

Here's why NBFCs will have to look beyond banks for funds
11 months, 3 weeks ago

Here's why NBFCs will have to look beyond banks for funds

Live Mint  

Mumbai: Non-bank lenders that borrow heavily from commercial banks to lend further may need to diversify their funding sources in the year ahead, given the rising competition for bank credit, and higher risk weights on loans to these lenders, experts said. “The idea is to improve funding access to productive sectors, but the regulations can lead to customers paying more …

Central bank to review rules as Assam eyes curbs on MFI ops
3 years, 10 months ago

Central bank to review rules as Assam eyes curbs on MFI ops

Live Mint  

The Reserve Bank of India’s decision to look at a uniform regulatory framework for all microfinance lenders, though being discussed for more than five years now, has been brought into focus by an Assam government bill to regulate microlenders in the state, experts said. Uniformity in rules has been sought since Bandhan Financial Services turned into a bank in 2015 …

NBFCs have an edge in banking licence race
4 years, 1 month ago

NBFCs have an edge in banking licence race

Live Mint  

Large non-bank lenders stand to gain the most from the Reserve Bank of India panel’s proposal to allow large companies and shadow lenders into banking services, experts said. More importantly, it would allow RBI to increase regulatory oversight over some of the large shadow lenders, particularly after the collapse of Infrastructure Leasing & Financial Services Ltd and Dewan Housing Finance …

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