New Delhi, Aug 17 (IANS) The Reserve Bank of India (RBI) has sought feedback from non-banking finance companies (NBFCs) on draft guidelines proposed for regulating revolving credit facilities, while emphasising the need for stronger compliance, internal audit and risk management frameworks, a report has said.
A report by NDTV Profit — citing sources — said that during a recent interaction with senior NBFC executives, the central bank underscored the importance of maintaining robust internal controls and closely monitoring products that are witnessing rapid growth.
In addition, the central bank is also looking to align the regulatory framework for NBFCs more closely with global standards, it added.
The regulator urged NBFCs to identify and address risks arising from new products and business models at an early stage to prevent potential build-up of vulnerabilities.
The RBI also acknowledged that NBFCs are often early adopters of technology-driven lending products and business models and indicated that insights from their experience could help inform regulations for emerging areas.
Moreover, the role of self-regulatory organisations (SROs) also came up for discussion. The central bank clarified that SROs should not operate as parallel regulators but instead serve as the industry’s first line of defence by promoting compliance and helping address emerging risks.
It further advised NBFCs to strengthen consumer grievance redressal mechanisms and ensure customer complaints are resolved effectively within prescribed timelines.
However, NBFCs were also asked to ensure full compliance with the RBI’s digital lending framework and the Digital Personal Data Protection Act, particularly as lenders increasingly rely on technology and digital channels for customer acquisition, underwriting and servicing.
Last week, RBI officials met senior executives of NBFCs as part of ongoing supervisory engagement amid the regulator’s heightened focus on risks associated with rapidly expanding lending products and technology-led business models across the sector.
–IANS
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