RBI Governor Das: No System-Wide Problem with NBFCs

Mumbai, Apr 5 (PTI) After acting against two non-banking financial companies (NBFCs) following concerns on their business practices, RBI Governor Shaktikanta Das said there is no "system-wide" problem with such lenders.

Addressing the customary post-policy press conference, Das said it is not fair to perceive the actions "which came on consecutive days last month" as a "spate" of regulatory interventions.

"As a part of the supervision, we take regular review of all players, particularly the major players. I don't want to say that this is a system-wide problem because we have supervised all the players. The action is only in outlier cases," Das said.

Earlier, he also said the country's financial sector is "stable".

He said if the RBI officials find some deviation or non-compliance during the supervision process, the first attempt is for sensitisation of the entity's management on a bilateral level to take the corrective action.

"Where we see the problems are huge, or the problems are persistent, then only we act," he said, explaining the trigger for the regulatory actions.

It can be noted that on March 4, the RBI asked IIFL Finance to stop sanctioning or disbursing gold loans with immediate effect, and followed it up by barring J M Financial from giving loans against shares and debentures immediately on observing issues in loan processing and governance.

Later in the month, the central bank invited tenders appointment of auditors to undertake special audits at both the firms.

Speaking to reporters on Friday, Das said there are over 9,000 registered non-bank lenders and the RBI has acted against only two of them, along with a payment bank.

Therefore, it will not be correct to perceive this as a spate of actions, he said.

Meanwhile, Das said the central bank will release a framework on FinTech Self-Regulatory Organization by this month-end, and the first of such bodies will come into existence this year itself.

Deputy Governor Swaminathan J said it is necessary for banks to monitor the end use of funds as per the regulations, and added that the central bank will take action against entities if it finds an "egregious" violation.