In a significant move to address sectoral concerns, Reserve Bank of India (RBI) Governor Sanjay Malhotra convened a high-level meeting with the top leadership of major non-banking financial companies (NBFCs) on Monday. The discussions centered on the critical issues facing the sector, with a strong emphasis on maintaining robust lending practices and vigilant monitoring of asset quality.
Key Focus on Prudent Lending and Stability
The meeting saw participation from the heads of prominent government-owned NBFCs, housing finance companies, and microfinance institutions. Collectively, these entities represent more than half of India's NBFC sector by total assets, underscoring the meeting's importance. Governor Malhotra acknowledged the pivotal role NBFCs play in extending credit to households and businesses across the nation.
He, however, urged the executives to adhere to prudent lending practices and keep a close watch on repayment trends. The governor highlighted that sound underwriting standards and strict, continuous monitoring of asset quality are non-negotiable for ensuring the long-term stability and health of the financial sector.
Call for Enhanced Customer Service and Ethics
Beyond financial metrics, the RBI governor also addressed operational conduct. Malhotra called for a significant improvement in customer service and the embedding of strong ethics in all business operations. He stated that these elements are fundamental for building lasting trust with customers and facilitating sustainable growth for the institutions.
The discussions also covered the themes of responsible lending and the timely resolution of customer grievances. The central bank's message was clear: growth must be balanced with consumer protection and ethical conduct.
High-Level RBI Presence
The meeting featured a strong contingent from the central bank. It was attended by several senior RBI officials, including Deputy Governors T Rabi Sankar, Swaminathan J, Poonam Gupta, and S C Murmu. The chief executive of the National Housing Bank was also present, indicating a comprehensive regulatory review of the housing finance segment.
This gathering follows a similar consultation held with NBFCs on February 13 last year, marking it as part of the RBI's ongoing engagement with key stakeholders in the shadow banking system. The meeting underscores the regulator's proactive approach to supervising a sector that is crucial for financial inclusion and credit delivery in India.
