Mumbai: Reserve Bank of India (RBI) officials met senior executives of non-banking finance companies (NBFCs) on Friday and sought feedback on the draft guidelines proposed to regulate revolving credit facilities, while stressing the need for stronger internal compliance and risk management practices.
During the interaction, the regulator emphasised that NBFCs should maintain robust internal audit and compliance frameworks and closely monitor products witnessing rapid growth. The RBI is also seeking to align the regulatory framework for NBFCs with global standards, according to people familiar with the discussions.
The central bank urged NBFCs to ensure that risks arising from new products and business models are identified and addressed at an early stage.
The RBI also acknowledged that NBFCs are often among the first lenders to adopt technology-led products and business models. The regulator indicated that it could learn from NBFCs' experience with such products while framing regulations for emerging areas.
The role of self-regulatory organisations (SROs) was also discussed. The RBI clarified that an SRO should not function as a parallel regulator but should act as the first line of defence for the industry by promoting compliance and addressing emerging risks.
The regulator also asked NBFCs to strengthen consumer grievance redressal mechanisms and ensure that customer complaints are resolved effectively and within stipulated timelines.
NBFCs were further advised to ensure full compliance with the RBI's digital lending framework and the Digital Personal Data Protection Act, particularly as lenders increasingly use technology and digital channels for customer acquisition, underwriting and servicing.
The meeting comes amid the RBI's increased focus on risks arising from rapidly expanding lending products and technology-led business models across the NBFC sector.
Also Read | RBI To Shut FCNR(B) Swap Facility Earlier Than Planned As Inflows Top $52 Billion
Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.
