JOIN USThe Reserve Bank of India (RBI) is open to supporting new types of non-banking financial companies (NBFC), if the economy requires it, according to the central bank’s deputy
governor.
“The Reserve Bank is allied to the developmental needs of the economy, and therefore, will continue to approve of new types of NBFCs if the economy will so require them,” RBI Deputy Governor R Gandhi, said while addressing CII’s first NBFC Summit with the theme ‘Regulatory Paradigm and Contours of Growth — Vision 2020’.
According to Gandhi, NBFCs only compliment commercial banking and require appropriate vigilance.
“The world over, there is an awakening, post the financial crisis of 2008, about the existence, contribution, magnitude, significance and risk of the NBFC sector. From benign neglect to indifference of this sector, the world has now become anxious and seriously concerned about it.
This has resulted in enhanced attention, monitoring and regulation of the sector. While the world sat up and noticed the sector recently, India had understood its relevance way back in 1963, chapter 3B dealing with regulations of Non-Banking Financial Institutions was added to the Reserve Bank of India Act 1934,” Gandhi said.
India recognised that non-banking financial activities are an integral part of the financial system, and compliment commercial banking. Only appropriate vigilance will be required, Gandhi added.
Commenting about the future of NBFCs, Gandhi said that he sees a better scope for infrastructure NBFCs.
“In my opinion, prospects for the sector are not going to be uniform. Different segments of the sector are posed for different prospects and challenges. Infrastructure NBFCs will have a greater scope in the coming years, both because economic growth will bring forth new projects, and banks having a restrained approach towards such projects,” Gandhi said.