Reserve Bank of India (RBI) Governor Shaktikanta Das on Friday met the executives of large non-banking finance companies (NBFCs) and housing finance companies (HFCs) and pushed for strong governance standards, improve risk management practices and look to contain risks associated with unsecured lending, as per a release by the central bank.
RBI said that these entities constitute nearly 50% of the total assets of all NBFCs including HFCs.
The meeting was also attended by the Deputy Governors Shri M. Rajeshwar Rao and Shri Swaminathan J. and the Managing Director, of National Housing Bank (NHB), Shri S. K. Hota, besides a few senior officials of the RBI.
“The Governor in his opening remarks complimented the NBFCs and HFCs for their improved financial health and operational resilience in recent years. While acknowledging the important role played by the sector in delivering credit to the unbanked and underserved areas, the Governor advised that the NBFCs and HFCs need to remain alert to avoid any complacency during good times,” a press release said.
Mechanisms Of Assurance
Shaktikanta Das emphasized the requirement to enhance the levels of governance norms and mechanisms of assurance, specifically focusing on areas like Compliance, Risk management, and Internal audit within these organizations. The release added that discussions were held on issues ranging from diversifying the resources for NBFCs and HFCs to reducing the reliance on bank borrowings.
“The discussions were also held on diversifying the resources for NBFCs and HFCs to contain the increasing reliance on bank borrowings; risks associated with high credit growth in retail segment mostly in unsecured; prioritizing the upgradation of IT systems and cyber security; strengthening Balance Sheets with improved provisioning cover; monitoring of stressed exposures and slippages; ensuring robust liquidity and asset-liability management; ensuring reasonableness and transparency in pricing of credit; and adherence to Fair Practices Code including robust grievance redress mechanism,” the release added.
Download The Mint News App to get Daily Market Updates.
More
Less
Updated: 25 Aug 2023, 06:07 PM IST
www.livemint.com
Source link