Strive For Half Of Bank-Credit Volume: Sitharaman To NBFCs
The finance minister urged for stronger collaboration between NBFCs, and public sector banks and fintechs.
Non-banking financial companies must aim for at least 50% of the total loan volume disbursed by scheduled commercial banks as part of their role in India's financial system, Finance Minister Nirmala Sitharaman said on Wednesday.
The sector is central to the India growth story and must now deepen its partnerships with banks and fintechs, she said at the NBFC Symposium in New Delhi.
"You must aim to reach at least 50% of the total volume disbursed by scheduled commercial banks," she said, adding that 50% of NBFC lending must be directed towards high-growth and impact sectors by 2047, when India completes 100 years of independence.
For this to happen, Sitharaman urged for stronger collaboration between NBFCs and public sector banks and fintechs. Sitharaman said that PSU banks in each state must proactively engage with NBFCs for co-lending opportunities and also to enhance priority sector lending.
"Presence of NBFCs must be used more by public sector banks. I want to see more success in co-lending partnerships," she said.
As technology becomes the central pillar of operations, she said that NBFCs must aim for 100% adoption of digital processes across the entire loan life cycle.
"This is an objective that I will put before you. It is worth infusing it in your model of business…and to enable this, there is need to develop minimum common technology standards for all registered NBFCs," she said.
She believes that the Department of Financial Services should play an active role in this. She also said that recent regulatory measures by the Reserve Bank of India, such as restoration of risk weights on lending to NBFCs by banks and easing financial conditions, will improve the credit outlook.
The minister also urged NBFCs to pass on these benefits of lower funding costs to borrowers.
Acknowledging the evolving regulatory environment, Sitharaman urged NBFCs to engage constructively with RBI and DFS to flag on-ground challenges and suggest ideas for policy support.
She also cautioned non-bank lenders against adventurism and emphasized the need to balance growth with governance, risk management and customer protection.
