Money & Banking

RBI must hold ‘periodic dialogue’ with NBFCs

KR SRIVATS New Delhi | Updated on January 22, 2018 Published on November 24, 2015

Raman Aggarwal, Chairman, FIDC

A formalised arrangement for interaction will help develop the sector, says FIDC chief

The Reserve Bank of India must put in place a “formalised arrangement” for holding periodical dialogues with non-banking finance companies, a top industry official said.

Having a formalised arrangement of dialogue will help in the development of the NBFC sector, an aspect that policymakers and the regulator must pay attention to, Raman Aggarwal, Chairman, Finance Industry Development Council (FIDC), told BusinessLine.

Such an arrangement will also, to a certain extent, help level the playing field for NBFCs vis-à-vis commercial banks, which already enjoy frequent formalised interactions with the regulator and the government, said Aggarwal.

FIDC, a self-regulatory organisation, is the recognised face of asset-financing NBFCs in the country.

Aggarwal, who recently assumed charge of FIDC, wants to reposition NBFCs in the Indian financial system and change the perception about this sector.

Aggarwal also suggested that a separate refinance window be created for asset-financing NBFCs and felt that the recently set up MUDRA Bank could be an ideal body for this purpose.

Looking abroad

FIDC is in talks with several overseas bodies as part of efforts to develop international linkages, said Mahesh Thakkar, Director-General, FIDC.

Tie-ups with overseas associations will help FIDC members learn best international practices and undertake activities, such as cross-border leasing of assets and providing more funding avenues, he noted.

No competition

FIDC does not see the RBI move to grant in-principle nod for 11 payments banks and 10 small finance banks as “competition” for the asset-financing NBFCs.

Corporate houses and NBFCs backed by business houses are not eligible to apply for small finance bank licences.

Published on November 24, 2015
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