With the Reserve Bank of India taking a keener interest in lending business models that could foster risk, RBI Governor Shaktikanta Das stated on Thursday that the regulator may raise red flags, but the solutions have to come from the regulated entities.
"RBI has also taken a keen interest in the functioning of statutory auditors of regulated entities," Das said.
Aggressive credit growth and increased risky asset exposure could raise asset quality challenges in the longer term for NBFCs in India, according to a report from Fitch Ratings on Thursday.
Rapid growth and concentrated exposure in cyclical, long-tenor products, such as SME loans-against-property and large-ticket commercial real-estate loans, could pose asset-quality and liquidity risks for lenders, unless mitigated by disciplined risk controls.Indian NBFIs’ Buoyant Risk Appetites Could Carry Long-Term Risks, Fitch Ratings
Recent events in the U.S. and Europe indicate that risks for banks can also emerge from a part of their balance sheet, that was otherwise considered safe, Das said.
"Cybersecurity risks also remain top of the list when it comes to operational risks for financial institutions," the governor said.
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