The Reserve Bank of India (RBI) is inundated with complaints of harsh recovery practices, breach of data privacy, increasing fraudulent transactions, cybercrime, excessive interest rates and harassment of consumers, said deputy Governor M Rajeshwar Rao cautioning NBFC players against coercive recovery practices.
"My ask here is that we should not compromise on the ethos of the finance for mercurial or ephemeral gains. These gains would anyway accrue to the institutions over the long term if and when it is built on an edifice of trust and mutual benefit," he said, adding such recovery practices have dented the credibility of the whole system.
The deputy was speaking at the NBFC Summit organised by CII.
The challenge, therefore, is to restore trust in the sector by ensuring that few entities or activities do not generate vulnerabilities that go undetected and create shocks and give rise to systemic risk through their inter-linkages with the financial system, he added.
NBFC sector including housing finance companies have assets worth more than Rs 54 lakh crore or equivalent to about 25% of the asset size of the banking sector.
He said that NBFCs are at an inflexion point and added that from here the entities which put the interest of the customer above everything else, are responsible while innovating and have strong governance culture, will thrive while others will fade with the passage of time.
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(Published 22 October 2021, 11:22 IST)
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