Reserve Bank of India (RBI) Governor Shaktikanta Das has warned non-banking financial companies (NBFCs) not to adopt wrong methods to grow their business faster. Strict action may be taken against any NBFC found guilty of doing so. Announcing the decisions of the bi-monthly monetary policy review meeting, the governor in strong words asked such NBFCs to be honest, fair and follow sustainable practices, PTI reported.
Consider customer complaints honestly
According to the news, Das clearly said that NBFCs including MFIs (micro finance institutions) and HFCs (housing finance companies) should follow sustainable business goals. Also said that adopt a compliance first culture, adopt a strong risk management framework, strictly adhere to the Fair Practices Code and look into customer complaints honestly. He cautioned that the Reserve Bank is keeping a close watch on these areas and will not hesitate to take appropriate action if necessary.
NBFCs should improve themselves
Governor Shaktikanta Das said that the Reserve Bank of India wants NBFCs to reform themselves. He said that the NBFC sector has registered impressive growth over the last few years and such lenders have helped in the policy objective of financial inclusion. However, he regretted that some NBFCs are pursuing growth aggressively without building sustainable business practices and risk management framework. The Governor said that an indiscriminate approach of growth at any cost would be counterproductive for himself.
also asked to review
Das also asked organizations to review remuneration practices, variable pay and incentive structures for their employees, as he believes some of these appear to be purely target-based. These can result in a hostile work culture and poor customer service. Das asked banks and NBFCs to carefully assess their personal loans in these sectors, both in terms of size and quality, and closely monitor credit.
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