RBI tells NBFCs to be fair in lending

MUMBAI: The Reserve Bank of India (RBI), which had slapped temporary business curbs on some non-bank lenders over complaints of usurious rates, urged chiefs of large NBFCs to proactively adopt fairness in lending and recovery and simultaneously put in place robust grievance redressal mechanisms.

The RBI deputy governor, J Swaminathan, made this remark on Friday at a Chennai conference organised by the banking regulator for large NBFCs, statutory auditors and chairpersons of audit committees at the lenders.

A statement issued by RBI stated that Swaminathan “exhorted the NBFCs to proactively adopt fairness in lending and recovery supported by a robust grievance redress mechanism.”

He also stressed that risk-taking by NBFCs must be prudent and well-planned, and never beyond the risk absorption capacity of the entity concerned.

The RBI’s concerns stem from the higher-interest some finance companies charge borrowers. In recent months, the regulator had to impose lending curbs on a few finance companies, such as Navi FInserv, Arohan Financial Services and DMI Finance, due to the alleged usurious rates they charged borrowers.

These restrictions were reversed after the finance companies took corrective measures.