New Delhi, August 17: The Reserve Bank of India (RBI) has requested feedback from non-banking financial companies (NBFCs) regarding proposed regulations on revolving credit. The central bank emphasized the need for robust compliance, internal audits, and risk management frameworks, according to a report.
Sources cited by NDTV indicated that during a meeting with senior officials from NBFCs, the RBI urged the strengthening of internal controls and monitoring of the rapidly growing segment.
Additionally, the central bank is considering aligning the regulatory framework for NBFCs more closely with global standards.
The regulator advised NBFCs to identify and mitigate risks associated with new products and business models at an early stage to prevent potential vulnerabilities from escalating.
The RBI acknowledged that NBFCs often adopt technology-based lending products and business models first. The insights gained from their experiences could assist in formulating regulations for emerging sectors.
The meeting also addressed the role of self-regulatory organizations (SROs). The central bank clarified that SROs should not operate as parallel regulators but should act as the industry’s “first line of defense” by ensuring compliance and addressing emerging risks.
Furthermore, the RBI advised NBFCs to enhance their systems for resolving customer complaints and ensure that issues are addressed effectively within a specified timeframe.
NBFCs were also reminded to fully comply with the RBI’s digital lending framework and the Digital Personal Data Protection Act, especially as lenders increasingly rely on technology and digital channels for customer engagement, underwriting, and servicing.
Last week, RBI officials met with senior NBFC executives as part of the regulator’s monitoring process, focusing on risks associated with rapidly growing lending products and technology-based business models.
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