RBI cancels registration of 120 non-bank lenders, put 50 under close watch

RBI cancels registration of 120 non-bank lenders, put 50 under close watch

The Reserve Bank of India (RBI) has put 50 non-bank lenders under close monitoring and has cancelled the registrations of another 120 of such lenders for non-compliance of norms.

According to the banking regulator, it has tightened the on-site supervision of non-banking financial companies (NBFCs) during the year, including stricter coverage of core investment companies and government-owned companies along with “incisive on-site supervision of smaller NBFCs”.

RBI cancels registration of 120 non-bank lenders, put 50 under close watchRBI is also planning to undertake a scale-based approach for the regulation of Non-Banking Financial Companies (NBFCs) in a bid to identify a small set of so-called ‘systemically significant’ non-bank financiers, which can potentially affect the financial stability.

It will also be taking steps for improving the effectiveness of supervision and monitoring of NBFCs by firming the quality of Ind-AS implementation and subsequent regulatory guidance directions. Further, it plans to promote tough compliance and risk culture within non-banks, and monitor NBFCs for not compliant with its directions on the maintenance of adequate net owned funds (NOF) and returns filing.

Also Read:- Impact of COVID 2019 on NBFCs

“RBI has already advised banks and NBFCs to carry out covid-19 stress tests and take necessary remedial measures proactively,” the central bank said.

In November 2019, RBI governor Shaktikanta Das had stated that they are monitoring the top 50 NBFCs closely and interacting regularly are closely monitoring top 50 NBFCs, with the management of these companies to initiate corrective steps.

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